120-day extension to file a late check-the-box election treating a foreign company as a disregarded entity

Plain-English summary

A foreign company wanted to be treated as a disregarded entity (ignored as
separate from its owner) for U.S. federal tax purposes. To do that it had to file
Form 8832, the entity-classification "check-the-box" election, by a set deadline,
but it missed the filing. The company asked the IRS for extra time under the
Section 301.9100-3 relief rules, representing that it acted reasonably and in good
faith and that late relief would not hurt the government. The IRS agreed and gave
the company 120 days from the date of the letter to file Form 8832 with the
intended effective date. The relief is conditioned on filing all required returns
(including Form 8858 for disregarded entities) for open years consistent with the
election. The IRS cautioned that granting more time to elect is not itself a
finding that the company qualifies to make the election.

Ruling snapshot

• Question: Should the IRS grant more time to file a late Form 8832 electing foreign disregarded-entity treatment?
• Outcome: Approved (120-day extension granted under Treas. Reg. § 301.9100-3)
• Key authorities: Treas. Reg. §§ 301.7701-3, 301.9100-1 through 301.9100-3; § 965; Treas. Reg. § 1.965-4(c)(2)

Full text (IRS public release)

Internal Revenue Service                          Department of the Treasury
                                                  Washington, DC 20224

Number: 202426008                                 Third Party Communication: None
Release Date: 6/28/2024                           Date of Communication: Not Applicable
Index Number: 7701.00-00, 9100.00-00,
              9100.31-00                           Person To Contact:
                                                    --------------, ID No. --------
[Taxpayer name and address redacted]              Telephone Number:
                                                    --------------
                                                  Refer Reply To:
                                                    CC:PSI:B03
                                                  PLR-119260-23
                                                  Date:
                                                  April 01, 2024

Company     = --------------
Partnership = --------------
Country     = --------------
Date        = --------------

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

      This letter responds to a letter dated September 22, 2023, and subsequent
correspondence, submitted on behalf of Company by its authorized representatives,
requesting an extension of time under § 301.9100-3(c) of the Procedure and
Administration Regulations to file an election under § 301.7701-3(c) to be treated as a
foreign disregarded entity for federal tax purposes.

                                         FACTS

        The information submitted states that Company was formed on Date under the
laws of Country. Company represents that on Date, its sole owner was Partnership, an
entity formed under the laws of Country and treated as a partnership for federal tax
purposes.

       Company represents that on 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 failed to 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, 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 owners 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 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 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 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 under all subtitles of the Internal
Revenue Code, except subtitles E, G, H, I. Section 301.9100-1(b) defines the term
"regulatory election" as including an election whose due date is prescribed by a
regulation published in the Federal Register.

       Section 301.9100-1 through 301.9100-3 provide 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 rules for requesting extensions of time for
regulatory elections that do not meet requirements of § 301.9100-2.

       Requests for relief under § 301.9100-3 will be granted when the taxpayer
provides evidence (including affidavits described in § 301.9100-3(e)) to establish that
the taxpayer acted reasonably and in good faith, and that granting relief will not
prejudice the interests of the government.

                                    CONCLUSION

        Based solely on the facts submitted and the representation 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,
and thereafter, provided Company's election was otherwise valid under § 301.7701-
3(b)(2)(i). A copy of this letter should be attached to the Form 8832.

         This ruling is contingent on Company, within 120 days of the date of this letter,
filing all required returns for all open years consistent with the requested relief. These
returns may include, but are not limited to, Form 8858, Information Return of U.S.
Persons With Respect to Disregarded Entities, such that these returns reflect the
consequences of the relief granted in this letter. 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
Internal Revenue Code (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.

Pursuant to a power of attorney on file with this office, we are sending a copy of this
letter to Company's authorized representatives.

                                      Sincerely,


                                      Associate Chief Counsel
                                      (Passthroughs & Special Industries)


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

Enclosure:
      Copy of this letter for § 6110 purposes

cc: