An LLC that missed the deadline to be taxed as a corporation gets 120 days to file a late Form 8832

Plain-English summary

A limited liability company wanted to be taxed as a corporation (an "association taxable as a corporation") instead of getting the default treatment for an LLC, which is a partnership or a disregarded entity. To change its classification, an LLC files Form 8832, the entity classification election. This company intended the corporate treatment to start in a specific year but did not file Form 8832 on time. It asked the IRS for an extension under Treasury Regulation section 301.9100-3, representing that it acted reasonably and in good faith and that relief would not harm the government. The IRS agreed and granted 120 days from the date of the letter to file the late Form 8832 effective as of the intended year. The IRS did not decide whether the company otherwise qualifies to make the election, only that the late filing is excused.

Ruling snapshot

• Question: Should an LLC that missed the deadline get more time to file a late entity-classification election to be taxed as a corporation?
• Outcome: Approved (120-day extension to file Form 8832 under Treas. Reg. § 301.9100-3)
• Key authorities: Treas. Reg. § 301.7701-3; Treas. Reg. §§ 301.9100-1 through 301.9100-3

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 202145013 Third Party Communication: None
Release Date: 11/12/2021 Date of Communication: Not Applicable
Index Number: 7701.00-00, 9100.31-00
Person To Contact:
----------------- -------------------, ID No. -----------------
----------------------------- Telephone Number:
-------------------------------------- ---------------------
-------------------------------- Refer Reply To:
CC:PSI:B03
PLR-103598-21
Date:
August 16, 2021

                                               LEGEND

X = ------------------------------------------------------------------------------------------
-------------------------------
Date 1 = --------------------------
Year 1 = -------
State = -------------

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

   This letter responds to a letter dated January 13, 2021, submitted on behalf of X

by X's authorized representative, requesting an extension of time under § 301.9100-3 of
the Procedure and Administration Regulations to file an election under § 301.7701-3 to
be treated as an association taxable as a corporation for U.S. federal income tax
purposes.

                                                FACTS

    According to the information submitted, X was organized as a limited liability

company under the laws of State on Date 1. X intended to be classified as an
association taxable as a corporation for federal tax purposes effective for the Year 1
taxable year. However, X did not timely file Form 8832, Entity Classification Election, to
elect to be treated as an association taxable as a corporation for federal tax purposes
effective Year 1.

   X represents that it acted reasonably and in good faith. Further, X represents

that the interests of the Government will not be prejudiced for all taxable years affected
by the election by granting the relief sought.
PLR-103598-21 2

                              LAW AND ANALYSIS

    Section 301.7701-3(a) provides, in part, 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 as provided in §
301.7701-3. 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, and an eligible entity with a single owner can elect to be classified as an
association or to be disregarded as an entity separate from its owner.

  Section 301.7701-3(b)(1) provides that, unless the entity elects otherwise, a

domestic eligible entity is classified as a partnership if it has two or more members or is
disregarded as an entity separate from its owner if it has a single owner.

    Section 301.7701-3(c)(1)(i) provides that an eligible entity may elect to be

classified other than as provided under § 301.7701-3(b), or to change its classification,
by filing Form 8832 with the appropriate service center. Under § 301.7701-3(c)(1)(iii),
this election will be effective on the date specified by the entity on Form 8832 or on the
date filed if no such date is specified. The date specified on Form 8832 cannot be more
than 75 days prior to the date on which the election is filed and cannot be more than 12
months after the date on which the election is filed.

   Section 301.9100 1(c) provides that the Commissioner may grant a reasonable

extension of time to make a regulatory election, or a statutory election (but no more than
6 months except in the case of a taxpayer who is abroad), under all subtitles of the
Internal Revenue Code (Code) except subtitles E, G, H, and I. Section 301.9100-1(b)
provides that the term “regulatory election” includes 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 the

Commissioner will use to determine whether to grant an extension of time to make an
election. Section 301.9100-2 provides the standards the Commissioner will use to
determine whether to grant an automatic extension of time for making certain elections.
Section 301.9100-3 provides the standards the Commissioner will use to determine
whether to grant an extension of time for regulatory elections that do not meet the
requirements of § 301.9100-2. Under § 301.9100-3, a request for relief will be granted
when the taxpayer provides evidence (including affidavits described in § 301.9100-3(e))
to establish to the satisfaction of the Commissioner that the taxpayer acted reasonably
and in good faith, and the grant of relief will not prejudice the interests of the
Government.
PLR-103598-21 3

                                  CONCLUSION

    Based solely on the information submitted and the representations made, we

conclude that X has satisfied the requirements of §§ 301.9100-1 and 301.9100-3. As a
result, X is granted an extension of time of 120 days from the date of this letter to file a
Form 8832 with the appropriate service center to elect to be classified as an association
taxable as a corporation for U.S. federal tax purposes, effective Year 1. A copy of this
letter should be attached to the Form 8832.

   Except as specifically set forth above, we express or imply no opinion concerning

the federal tax consequences of the facts described above under any other provision of
the Code and the regulations thereunder. In addition, § 301.9100-1(a) provides that the
granting of an extension of time for making an election is not a determination that the
taxpayer is otherwise eligible to make the election.

   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.

  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, we are sending a

copy of this letter to X's authorized representative.

                                   Sincerely,

                                   Associate Chief Counsel
                                   (Passthroughs & Special Industries)




                               By:_________________________
                                  Richard T. Probst
                                  Senior Technician Reviewer, Branch 3
                                  Office of Associate Chief Counsel
                                  (Passthroughs & Special Industries)

Enclosures (2)
A copy of this letter
A copy for § 6110 purposes

cc: