IRS grants 90 days to file a late consolidated-return election for 52-53-week tax years

Plain-English summary

A corporate parent filed consolidated returns for an affiliated group whose members included corporations using a 52-53-week tax year. After acquired subsidiaries joined the group, all members' tax years ended within the same seven-day period, but the parent did not timely file the statement required by Rev. Proc. 89-56. The company showed that it reasonably relied on qualified tax professionals who failed to make or advise it to make the election, and it sought relief before the IRS discovered the omission. The IRS found that the parent acted reasonably and in good faith and that relief would not prejudice the government. It granted 90 days to file an amended consolidated return with the required statement, subject to the condition that the group's aggregate tax liability could not be lower than if the election had been timely made.

Ruling snapshot

• Question: Could the parent receive extra time to file the Rev. Proc. 89-56 statement for a consolidated group using 52-53-week tax years?
• Outcome: approved (90 days to file an amended return with the required statement)
• Key authorities: Treas. Reg. §§ 1.1502-76(a)(1), 301.9100-1, 301.9100-3; Rev. Proc. 89-56; Rev. Proc. 2006-21

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 202032004 Third Party Communication: None
Release Date: 8/7/2020 Date of Communication: Not Applicable
Index Number: 9100.00-00, 1502.76-00
Person To Contact:
------------------ ------------------------, ID No. ---------------
-------------------------------- Telephone Number:
----------------------- --------------------
-------------------------------- Refer Reply To:
---------------------------------- CC:CORP:3
PLR-128490-19
Date:
March 23, 2020

Legend

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

Acquired Subsidiaries = -------------------

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PLR-128490-19 2

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Year 1 = -------

Date A = --------------------------

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

Tax Professional = ------------------

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

This letter responds to a letter dated November 12, 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 to file a statement, pursuant to Rev. Proc. 89-56, 1989-2 C.B. 643, as modified by
Rev. Proc. 2006-21, 2006-1 C.B. 1050, to obtain the Commissioner’s advance consent
under §1.1502-76(a)(1) of the Income Tax Regulations, without filing a ruling request, to
file a consolidated federal income tax return in which one or more members of the group
use a 52-53-week tax year and the tax years of all members of the group end within the
same 7-day period. The request for an extension to file a statement pursuant to Rev.
Proc. 89-56 is sometimes hereinafter referred to as the "Election." The material
information is summarized below.

Parent is the common parent corporation of an affiliated group of corporations that file a
consolidated federal income tax return (the “Parent Group”). In Year 1, the Acquired
Subsidiaries became members of the Parent Group. One or more members of the
Parent Group was on a 52-53-week tax year and the tax years of all members of the
Parent Group, including the Acquired Subsidiaries, ended within the same 7-day period.
The Election was required to be filed with the Parent Group's consolidated federal
income tax return (filed on a timely basis, taking into account any extensions) for the tax
year ended Date A, but for various reasons, Parent did not make a valid Election.

PLR-128490-19 3

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
Internal Revenue Code except subtitles E, G, H, and I.

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 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).

In this case, the time for filing the Election is fixed by Rev. Proc. 89-56. Therefore, the
Commissioner has discretionary authority under §301.9100-3 to grant an extension of
time for the 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, Company Official, and
Tax Professional explain the circumstances that resulted in the failure to timely file the
Election. The information establishes that Parent reasonably relied on a qualified tax
professional, including a tax professional employed by Parent, who failed to make, or
advise Parent to make, the Election, and 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) and (v).

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, an extension of time is granted under §301.9100-3, until 90 days from the
date on this letter, for Parent to file a consolidated federal income tax return for the
Parent Group for the tax year ending on Date A, amended to include the statement
required by Rev. Proc. 89-56. A copy of this letter must be attached to such return;
alternatively, if the amended return is filed electronically this requirement may be
satisfied by attaching to that return a statement that provides the date on, and control
number (PLR-128490-19) of, the letter ruling.

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 Parent Group's tax liability for the year involved.

PLR-128490-19 4

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 as to the tax consequences of filing the Election late under the
provisions of any other section of the Code and regulations, or as to the tax treatment of
any conditions existing at the time of, or resulting from, filing the Election late that are
not specifically set forth in the above ruling. Specifically, we express no opinion as to
whether Parent Group qualifies to obtain the consent of the Commissioner provided
under Rev. Proc. 89-56. For purposes of granting relief under §301.9100-3, we relied
on certain statements and representations made by Parent, Company Official, and Tax
Professional. 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.

Pursuant to the power of attorney on file in this office, a copy of this letter is being sent
to your authorized representatives.

                                    Sincerely,


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

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