Company received 120 days for late foreign disregarded-entity election

Plain-English summary

A foreign eligible entity intended to be treated as disregarded from its sole owner but inadvertently missed the deadline for filing Form 8832. The entity represented that it acted reasonably and in good faith and that relief would not prejudice the government. The IRS granted 120 days from the ruling date to file Form 8832 with a copy of the letter and make the election effective on the requested date. The relief requires the company to file all outstanding original and amended federal income tax and information returns for open years within the same period. The election is ignored for Section 965 calculations if it otherwise would alter a U.S. shareholder's Section 965 elements.

Ruling snapshot

• Question: May the foreign company receive an extension to file Form 8832 and elect disregarded-entity status?
• Outcome: approved for 120 days, subject to outstanding-return filings
• Key authorities: Treas. Reg. §§ 301.7701-3, 301.9100-1, 301.9100-3; Treas. Reg. § 1.965-4(c)(2)

Full text (IRS public release)

 Internal Revenue Service                                       Department of the Treasury
                                                                Washington, DC 20224

 Number: 202417004                                              Third Party Communication: None
 Release Date: 4/26/2024                                        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:B03
 ------------                                                   PLR-114879-23
                                                                Date:
                                                                January 26, 2024




Legend


 Company            = -----------------------------------------------------------

 Country            = ----------

 Date               = -----------------------

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


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

       This letter responds to a letter dated July 26, 2023, and subsequent
correspondence, submitted on behalf of Company by its authorized representatives,
requesting an extension of time under § 301.9100-3 of the Procedure and
Administration Regulations for Company to file an election under § 301.7701-3 of to be
treated as foreign disregarded entity for federal tax purposes.


                                                     FACTS

        The information submitted states that Company was formed under the laws of
Country on Date. It is represented that since Date, Company has been owned solely by
X for federal tax purposes. Company represents that as of Date, it was a foreign entity
eligible to elect to be treated as a foreign disregarded entity for federal tax purposes.
Company further represents that it intended to be treated as a foreign disregarded entity
for federal tax purposes effective on Date. However, Company inadvertently failed to
PLR-114879-23                                  2

timely file Form 8832, Entity Classification Election, electing to be treated as a foreign
disregarded entity for federal tax purposes effective Date.

      Company represents that it acted reasonably and in good faith. Further,
Company represents that granting relief will not prejudice the interests of the
government.


                                   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 as provided in § 301.7701-3.

         Section 301.7701-3(b)(2)(i) provides that, except as provided in § 301.7701-
3(b)(3), unless the entity elects otherwise, a foreign eligible entity is – (A) a partnership
if it has two or more members and at least one member does not have limited liability;
(B) an association if all members have limited liability; or (C) disregarded as an entity
separate from its owner if it has a single owner that does not have limited liability.
Section 301.7701-3(b)(2)(ii) provides, in part, that for purposes of § 301.7701-3(b)(2)(i),
a member of a foreign eligible entity has limited liability if the member has no personal
liability for the debts of or claims against the entity by reason of being a member.

        Section 301.7701-3(c)(1)(i) provides, in part, 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 service center designated on Form 8832.

        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 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 has discretion to grant a
reasonable extension of time to make a regulatory election under all subtitles of the
Internal Revenue 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 that the
Commissioner will use to determine whether to grant an extension of time to make an
election. Section 301.9100-2 provides automatic extensions of time for making certain
elections. Section 301.9100-3 provides extensions of time for making elections that do
not meet the requirements of § 301.9100-2.
PLR-114879-23                                 3

        Under § 301.9100-3, requests 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 (1) the taxpayer acted reasonably and in good
faith, and (2) the granting relief will not prejudice the interests of the Government.

                                      CONCLUSION

        Based solely on the facts submitted and the representations made, we conclude
that Company has satisfied the requirements of §§ 301.9100-1 and 301.9100-3. As a
result, Company is granted an extension of time of one hundred twenty (120) days from
the date of this letter to file Form 8832 with the appropriate service center to elect to be
disregarded as an entity separate from its owner for federal tax purposes effective Date.
A copy of this letter should be attached to the Form 8832.

         This ruling is contingent on Company, within 120 days from the date of this letter,
filing all outstanding required federal income tax returns and information returns
(including amended returns) for all open years consistent with the requested relief. A
copy of this letter should be attached to any such returns.

       If applicable, Company’s election to be classified as a disregarded entity effective
Date is disregarded for purposes of determining the amounts of all § 965 elements of all
United States shareholders of Company if the election otherwise would change the
amount of any § 965 element of any such United States shareholder. See § 1.965-
4(c)(2) of the Income Tax Regulations.

       Except as specifically set forth above, we express or imply no opinion concerning
the federal tax consequences of the facts of this case 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.

      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 a power of attorney on file with this office, we are sending a copy of
this letter to Company’s authorized representatives.
PLR-114879-23                               4

       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 request for a ruling, it is subject to verification on examination.




                                      Sincerely,




                                      Robert D. Alinsky
                                      Branch Chief, Branch 3
                                      Office of Associate Chief Counsel
                                      (Passthroughs & Special Industries)




Enclosure
      Copy of this letter for § 6110(k)(3) purposes




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