IRS grants 90 days to make a late consolidated-return election

Plain-English summary

A domestic parent corporation and its affiliated group failed to timely elect to file a consolidated federal income tax return. The parent requested discretionary relief while the assessment periods for the affected year and later years remained open. The IRS concluded that the parent acted reasonably and in good faith and that relief would not prejudice the government. It granted 90 days to file the consolidated return with a Form 1122 consent for each group subsidiary. The extension depended on the group qualifying substantively and not obtaining a lower aggregate tax liability than it would have had with a timely election.

Ruling snapshot

• Question: Could the affiliated group receive extra time to make its consolidated-return election?
• Outcome: approved (90 days to file the consolidated return and subsidiary consents)
• Key authorities: Treas. Reg. §§ 1.1502-75(a)(1), 301.9100-1, 301.9100-3

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 202031004 Third Party Communication: None
Release Date: 7/31/2020 Date of Communication: Not Applicable
Index Number: 9100.20-00, 1502.75-00 Person To Contact:
-----------------------------, ID No. -------
----------------------------- -----------------
------------------- Telephone Number:
----------------------- --------------------
---------------- Refer Reply To:
--------------------------------------- CC:CORP:B01
PLR-125192-19
Date:
April 16, 2020

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

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

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

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

This letter responds to a letter dated October 14, 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. Parent is requesting an extension of
time 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, with Parent as the common parent, for the taxable year
ending on Date 1 (the “Election”). The material information submitted for consideration
is summarized below.

Parent was the common parent of an affiliated group of corporations for the taxable 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 taxable 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 return) was not filed by the due date of Parent's return. Subsequently, a
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 taxable year ending on Date 1 or any subsequent
taxable 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.

PLR-125192-19 2

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 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. 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 taxable year ending on Date 1 and all subsequent
years, an extension of time is granted under §301.9100-3, until 90 days from the date
on this letter, for Parent 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 taxable year ending on Date 1). Parent must
attach a copy of this ruling letter to such return, or if the return is filed electronically, a
statement must be attached to the return that provides the date on, and the control
number (PLR-125192-19) of, this ruling letter.

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

PLR-125192-19 3

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 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,


                                        ____________________________
                                        Thomas I. Russell
                                        Chief, Branch 1
                                        Office of Associate Chief Counsel (Corporate)

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