Late Form 8716 electing a non-calendar tax year for an S corporation is accepted

Plain-English summary

An S corporation wanted to use a tax year that ends on a date other than the calendar year-end it would otherwise be required to use. Section 444 lets certain pass-through entities make that choice by filing Form 8716 on time. The company hired a tax professional to handle its late S corporation election, and the professional filed the required forms but, through an administrative slip, did not label the Form 8716 the way the instructions require. The IRS approved the S election but not the requested year-end, so the company asked for relief under the Treasury "9100" regulations to file the year-end election late. Because the company reasonably relied on a qualified professional who made the error, the IRS found it acted in good faith and that granting relief would not cost the government tax revenue. The IRS accepted the late Form 8716, effective for the year requested, on the condition that the company keeps up with the required Section 7519 payments and filings that go with a Section 444 election.

Ruling snapshot

• Question: Should the IRS grant an extension of time to file a late Form 8716 electing a tax year other than the required year under Section 444?
• Outcome: approved (conditioned on ongoing Section 7519 compliance)
• Key authorities: IRC § 444; Treas. Reg. § 1.444-3T(b)(1); 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: 202429012
Release Date: 7/19/2024
Index Number: 9100.09-00
                                                         Person To Contact:
                                                         ------------------------, ID No.
                                                         Telephone Number:
                                                         --------------------
                                                         Refer Reply To:
                                                         CC:ITA:B08
                                                         PLR-123137-23
                                                         Date:
                                                         April 19, 2024


            Taxpayer    =   --------------------------------------------------------------------
            Advisor     =   -------------
            Date 1      =   --------------------------
            Date 2      =   ---------------
            Date 3      =   -----------------------
            Date 4      =   -------------------
            Year 1      =   -------



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

This letter responds to Taxpayer's request dated Date 1, seeking a private letter ruling
granting relief to make a late election pursuant to §§ 301.9100-1 through 301.9100-3 of
the Procedure and Administration Regulations. Specifically, Taxpayer requests an
extension of time to file Form 8716, Election to Have a Tax Year Other Than a Required
Tax Year, to adopt a taxable year ending on Date 2, effective for Year 1.

                                                FACTS

Taxpayer's Form 8716 electing a taxable year ending Date 2 for Year 1 was due on or
before Date 3, but was not filed by that date. Taxpayer represents that it filed an S
corporation election but did so late under Rev. Proc. 2013-30. Taxpayer had engaged
Advisor, a qualified tax professional, in order to assure a proper filing. Advisor filed the
required forms under that procedure, but due to an administrative error did not label
Form 8716 as required by instructions. The error was not due to any lack of due
diligence or prompt action on the part of Taxpayer.

On Date 4, the Taxpayer received Letter 385C from the Internal Revenue Service (IRS),
notifying the Taxpayer that the IRS had approved the S election, but had not approved
the requested year end. The letter provided that Taxpayer could refile Form 2553,
Election by a Small Business Corporation and Form 1128, Election to Adopt, Change,
PLR-123137-23                                 2

or Retain a Tax Year by the due date of the short period return, which had already
passed. Taxpayer then filed this ruling request.

                                  LAW AND ANALYSIS

Section 1.444-3T(b)(1) of the temporary Income Tax Regulations provides, among other
requirements, that Form 8716 must be filed by the earlier of (i) the 15th day of the fifth
month following the month that includes the first day of the taxable year for which the
election will first be effective, or (ii) the due date (without regard to extensions) of the
income tax return resulting from the election under Section 444 of the Internal Revenue
Code.

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 301.9100-3(a) provides that requests for extensions of time for
regulatory elections (other than automatic extensions covered in section 301.9100-2)
will be granted when the taxpayer provides evidence (including affidavits) to establish
that the taxpayer acted reasonably and in good faith and the grant of relief will not
prejudice the interests of the Government.

Section 301.9100-3 sets forth standards that the Commissioner will employ in
determining whether to grant discretionary relief in situations that do not meet the
requirements of § 301.9100-2. The standards applied are whether the taxpayer acted
reasonably and in good faith in the matter, and whether the granting of relief will
prejudice the interests of the government. Generally, a taxpayer will be deemed to have
acted reasonably and in good faith if the taxpayer reasonably relied on a qualified tax
professional, and that professional failed to make, or advise the taxpayer to make, the
election at issue.

Section 301.9100-3(c)(1)(i) states that the interests of the Government are prejudiced if
granting relief will result in the affected Taxpayers, in the aggregate, having a lower tax
liability in the aggregate for all years to which the election applies than if the election
had been made on a timely basis. Section 301.9100-3(c)(1)(ii) provides that relief
ordinarily will not be granted if the tax year in which the regulatory election should have
been made, or any tax year that would have been affected by the election had it been
timely made, is closed by the statute of limitations on assessment before the Taxpayer's
receipt of the ruling granting 9100 relief.

Section 301.9100-3(c)(3) provides that the interests of the Government are deemed
prejudiced except in unusual and compelling circumstances if an election is an
accounting period regulatory election (other than the election to use other than the
required taxable year under section 444) and the request for relief is filed more than 90
days after the due date for filing the Form 1128.
PLR-123137-23                                  3


Based on the facts and information submitted and the representations made, we
conclude that Taxpayer has acted reasonably and in good faith, and that the granting of
relief would not prejudice the interests of the government.

Accordingly, based solely on the facts and information submitted, and the
representations made in the ruling request, Taxpayer has satisfied the requirements for
the granting of relief. A copy of this letter and Taxpayer's Form 8716 electing to use a
taxable year ending Date 2 effective for Year 1 and accompanying Form 8752 should
be forwarded to the service center where Taxpayer files its returns of tax within 60 days
of the date of this letter. A copy of this letter must be attached to any income tax return
to which it is relevant.

Except for the specific ruling above, which is restricted to the filing of Form 8716, we
express or imply no opinion concerning the federal income tax consequences of the
facts of this case under any other provision of the Code or regulations that may be
applicable thereto. This letter ruling is based on facts and representations provided
by Taxpayer and its authorized representative, and is limited to the matters specifically
addressed. No opinion is expressed as to the tax treatment of the transactions
considered herein under the provisions of any other sections of the Code or regulations
which may be applicable thereto, or the tax treatment of any conditions not specifically
addressed herein.

This ruling is conditioned on Taxpayer complying with Section 1.7519-1T(a)(2), which
provides, in relevant part, that for each taxable year that an S corporation has an
election under Section 444 in effect, the S corporation must file a return as provided in
Section 1.7519-2T(a)(2) and make any required payments as provided in Section
1.7519-2T.

This office has not verified any of the material submitted in support of the request for a
ruling. However, as part of an examination process, the Service may verify the factual
information, representations, and other data submitted.

This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) provides that
it may not be used or cited as precedent.

In accordance with the Power of Attorney on file with this office, a copy of this letter is
being sent to your authorized representatives.
PLR-123137-23                                 4

A copy of this letter must be attached to any income tax return to which it is relevant.
Alternatively, taxpayers filing their returns electronically may satisfy this requirement by
attaching a statement to their return that provides the date and control number of the
letter ruling.



                                       Sincerely,



                                       Erika C. Reigle
                                       Senior Technician Reviewer, Branch 8
                                       Office of Associate Chief Counsel
                                       (Income Tax & Accounting)

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