Entity received 120 days for a late corporate classification election

Plain-English summary

An eligible entity intended to be classified as an association taxable as a corporation but inadvertently failed to file Form 8832 on time. It represented that its federal returns were consistent with the requested classification, no hindsight was involved, and relief would not prejudice the government. The IRS concluded that the regulatory-extension requirements were satisfied. It gave the entity 120 days to file a properly executed Form 8832 with the intended retroactive effective date.

Ruling snapshot

• Question: May the entity make a late election to be classified as an association taxable as a corporation?
• Outcome: approved, with 120 days to file Form 8832
• Key authorities: Treas. Reg. §§ 301.7701-2, 301.7701-3, and 301.9100-1 through 301.9100-3

Full text (IRS public release)

Internal Revenue Service                         Department of the Treasury
                                                 Washington, DC 20224

Number: 201937001                                Third Party Communication: None
Release Date: 9/13/2019                          Date of Communication: Not Applicable
Index Number: 7701.00-00, 9100.00-00,
              9100.31-00                         Person To Contact:
                                                 ----------------, ID No. ------------------
------------------------                         Telephone Number:
------------------                               ----------------------
------------------------------                   Refer Reply To:
 --------------------------------                CC:PSI:B01
                                                 PLR-101858-19
                                                 Date:
                                                 May 24, 2019




Legend

X        =         -------------------
-------------------------------------------

D1       =        -----------------

D2       =        ----------------------------

State =           --------------



Dear ------------:

This is in response to a letter dated January 1, 2019, submitted on behalf of X,
requesting an extension of time under § 301.9100-3 of the Procedure and
Administration Regulations to file an election under § 301.7701-3(c) to be treated as an
association taxable as a corporation for federal tax purposes.

FACTS

According to the information submitted, X was formed on D1 under the laws of State. X
intended to be treated as an association taxable as a corporation for federal tax
purposes effective D2. However, X inadvertently failed to timely file Form 8832, Entity
Classification Election, to be treated as an association taxable as a corporation for
federal tax purposes. X represents that it has filed its federal income tax returns
consistent with the relief requested, that no hindsight is involved, and that the interests
of the government will not be prejudiced if relief is granted.
PLR-101858-19                                  2


LAW AND ANALYSIS

Section 301.7701-3(a) provides that a business entity that is not classified as a
corporation under § 301.7701-2(b)(1), (3), (4), (5), (6), (7), or (8) (an eligible entity) can
elect its classification for federal tax purposes. An eligible entity with at least two
members can elect to be classified as either an association (and thus a corporation
under § 301.7701-2(b)(2)) or a partnership.

Section 301.7701-3(c)(1)(i) provides that an eligible entity may elect to classified other
than as provided under § 301.7701-3(b) by filing Form 8832 with the service center
designated on the form. Section 301.7701-3(c)(1)(iii) provides that an election made
under § 301.7701-3(c)(1)(i) will be effective on the date specified by the entity on Form
8832, or on the date filed if no such date is specified on the election form. The effective
date specified on Form 8832 can not be more than 75 days prior to the date on which
the election is filed and can not be more than 12 months after the date on which the
election is filed.

Section 301.7701-3(c)(2)(i) provides that such an election must be signed by either (A)
each member of the electing entity who is an owner at the time the election is filed; or
(B) any officer, manager, or member of the electing entity who is authorized (under local
law or the entity’s organization documents) to make the election and who represents to
having such authorization under penalties of perjury. Section 301.7701-3(c)(2)(iii)
provides that if an election is to have a retroactive effective date, each person who was
an owner between the date the election is to be effective and the date the election is
filed, and who is not an owner at the time the election is filled, must also sign the
election.

Under § 301.9100-1(c), the Commissioner may grant a reasonable extension of time to
make a regulatory election, or a statutory election (but no more than six months except
in the case of a taxpayer who is abroad), under all subtitles of the Internal Revenue
Code, except subtitles E, G, H, and I. Section 301-9100-1(b) defines the term
“regulatory election” as including an election whose due date is prescribed by a
regulation published in the Federal Register.

Sections 301.9100-1 through 301.9100-3 provide the standards that the Commissioner
will use to determine whether to grant an extension of time to make an election. Section
301.9100-1(a).

Section 301.9100-2 provides automatic extensions of time for making certain elections.
Section 301.9100-3 provides rules for requesting extensions of time for regulatory
elections that do not meet the requirements of § 301.9100-2.

Requests for relief under § 301.9100-3 will be granted when the taxpayer provides
evidence to establish that the taxpayer acted reasonably and in good faith, and that
granting relief will not prejudice the interests of the government.
PLR-101858-19                                  3


CONCLUSION

Based solely on the facts submitted and the representations made, we conclude that
the requirements of § 301.9100-3 have been satisfied. As a result, X is granted an
extension of time of 120 days from the date of this letter to make an election to be
treated as an association taxable as a corporation for federal tax purposes effective D2.
X must make the election by filing a properly executed Form 8832 with the appropriate
service center. A copy of this letter should be attached to the form.

Except as expressly provided herein, no opinion is expressed or implied concerning the
tax consequences of any aspect of any transaction or item discussed or referenced in
this letter.

This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) provides
that it may not be used or cited as precedent.

The ruling contained in this letter is based upon information and representations
submitted by the taxpayer and accompanied by a penalty of perjury statement executed
by an appropriate party. While this office has not verified any of the material submitted
in support of the ruling request, it is subject to verification on examination.

In accordance with the Power of Attorney on file with this office, a copy of this letter is
being sent to your authorized representative.


                                       Sincerely,

                                       Holly Porter
                                       Associate Chief Counsel
                                       (Passthroughs & Special Industries)


                                    By: Laura C. Fields
                                       Laura C. Fields
                                       Senior Technician Reviewer
                                       Office of the Chief Counsel
                                       (Passthroughs & Special Industries)


Enclosures (2)
      Copy of this letter
      Copy for § 6110 purposes

cc: