Corporate group receives time to elect consolidated return filing

Plain-English summary

A domestic parent corporation and its affiliated group failed to timely elect consolidated federal income tax return filing by submitting a valid consolidated return. The group requested relief before the IRS discovered the missed election, while the assessment periods remained open. The IRS found that the parent acted reasonably and in good faith and that relief would not prejudice the government. It granted 60 days to file the consolidated return and Forms 1122, provided the group substantively qualified and all relevant limitations periods remained open. Relief was also conditioned on the group's aggregate tax liability not being lower than it would have been with a timely election, and applicable penalties and interest remained in place.

Ruling snapshot

• Question: May the affiliated group make a late election to file a consolidated return?
• Outcome: approved
• Key authorities: Treas. Reg. §§ 1.1502-75(a)(1), 301.9100-1, and 301.9100-3; IRC §§ 6501 and 6662

Full text (IRS public release)

Internal Revenue Service                                      Department of the Treasury
                                                              Washington, DC 20224

Number: 202008002                                             Third Party Communication: None
Release Date: 2/21/2020                                       Date of Communication: Not Applicable
Index Number: 1502.00-00, 1502.75-00,
              9100.00-00, 9100.20-00                          Person To Contact:
                                                              --------------------, ID No. -----------------
----------------------------                                  Telephone Number:
--------------------------                                    --------------------
-----------------------------------------                     Refer Reply To:
-----------------------------                                 CC:CORP:2
                                                              PLR-113220-19
                                                              Date:
                                                              November 25, 2019




Legend

Parent                    =    -------------------------------------------------------------------------------------
                               -------------------------------------------------------------------------------------
                               ------------------------------------------------------

Sub 1                     =    -------------------------------------------------------------------------------------
                               ---------------------------

Date 1                    =    --------------------------

Company Official          =    -------------------------------------------------------------------------------------
                               ------------------------------------------------------------------------------


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

This letter responds to a letter dated June 4, 2019, submitted on behalf of Parent,
requesting an extension of time under §§301.9100-1 and 301.9100-3 of the Procedure
and Administration Regulations to file an election. The extension is being requested for
Parent and the members of its affiliated group (the “Parent Group”) to make an election
under §1.1502-75(a)(1) of the Income Tax Regulations to file a consolidated Federal
income tax return for the tax year ending on Date 1 (the “Election”). Additional
information was submitted subsequently. The material information submitted for
consideration is summarized below.

Parent is a domestic corporation that directly owned Sub 1 at the end of the tax year
ending on Date 1. An election for the Parent Group to file a consolidated income tax
return, with Parent as the common parent, for the tax year ending on Date 1 was due on
the last day prescribed by law (including extensions of time) for the filing of Parent's
return. For various reasons, a valid Election (i.e., the timely filing of the consolidated
PLR-113220-19                                  2

return) was not made. Subsequently, this request was submitted, under §301.9100-3,
for an extension of time to file the Election. The period of limitations on assessment
under section 6501(a) of the Internal Revenue Code (Code) has not expired for the tax
year ending on Date 1 or any subsequent tax year. Parent has represented that it is not
attempting to alter a return position taken for which an accuracy-related penalty has
been or could be imposed under section 6662 of the Code.

Under §301.9100-1(c), the Commissioner has discretion to 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
Code except subtitles E, G, H, and I.

Sections 301.9100-1 through 301.9100-3 provide the standards the Commissioner will
use to determine whether to grant an extension of time to make a regulatory election.
Section 301.9100-1(a). Section 301.9100-2 provides automatic extensions of time for
making certain elections. Requests for relief under §301.9100-3 will be granted when
the taxpayer provides evidence to establish to the satisfaction of the Commissioner that
the taxpayer acted reasonably and in good faith, and that granting relief will not
prejudice the interests of the government. Section 301.9100-3(a).

The time for filing the Election is fixed by the regulations (i.e., §1.1502-75(a)(1)).
Therefore, the Commissioner has discretionary authority under §301.9100-3 to grant an
extension of time for Parent Group to file the Election, provided Parent shows it acted
reasonably and in good faith, the requirements of §§301.9100-1 and 301.9100-3 are
satisfied, and granting relief will not prejudice the interests of the government.

Information, affidavits, and representations submitted by Parent and Company Official
explain the circumstances that resulted in the failure to timely file the Election. The
information establishes that the request for relief was filed before the failure to make the
Election was discovered by the Internal Revenue Service. See §301.9100-3(b)(1)(i).

Based on the facts and information submitted, including the representations made, we
conclude that Parent has shown it acted reasonably and in good faith, the requirements
of §§301.9100-1 and 301.9100-3 are satisfied, and granting relief will not prejudice the
interests of the government. Accordingly, provided that Parent Group qualifies
substantively to file a consolidated return for the applicable tax year and that the statute
of limitations is still open for the tax year ending on Date 1 and all subsequent years, an
extension of time is granted under §301.9100-3, until 60 days from the date on this
letter, for Parent Group to file the Election (by filing a consolidated return, with Parent as
the common parent, and attaching a Form 1122 for each subsidiary which was a
member of the Parent Group for the tax year ending on Date 1). Parent must attach a
copy of this ruling letter to the return, or if Parent Group files the return electronically, a
statement must be attached to the return that provides the date on, and the control
number (PLR-113220-19) of, this letter ruling.
PLR-113220-19                                  3

The above extension of time is conditioned on Parent Group's tax liability (if any) being
not lower, in the aggregate, for all years to which the Election applies, than it would
have been if the Election had been timely made (taking into account the time value of
money). No opinion is expressed as to the Parent Group's tax liability for the years
involved. A determination thereof will be made by the applicable Director's office upon
audit of the Federal income tax returns involved.

We express no opinion with respect to whether the Parent Group qualifies substantively
to file a consolidated return. In addition, we express no opinion as to the tax effects or
consequences of filing the return or the Election late under the provisions of any other
section of the Code or regulations, or as to the tax treatment of any conditions existing
at the time of, or effects resulting from, filing the return or the Election late that are not
specifically set forth in the above ruling.

For the purposes of granting relief under §301.9100-3, we relied on certain statements
and representations made by Parent and Company Official. However, the Director
should verify all essential facts. In addition, notwithstanding that an extension is
granted under §301.9100-3 to file the Election, penalties and interest that would
otherwise be applicable, if any, continue to apply.

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

In accordance with the Power of Attorney on file with this office, copies of this letter are
being sent to your authorized representatives.


                                        Sincerely,


                                        _T.Ian Russell__________
                                        T. Ian Russell
                                        Chief, Branch 1
                                        Office of Associate Chief Counsel (Corporate)