A foreign company gets more time to file the "check-the-box" election making it a disregarded entity

Plain-English summary

A company formed under the laws of a foreign country wanted to be treated as a disregarded entity for U.S. federal tax purposes, meaning it is ignored as separate from its single owner. That election is made by filing Form 8832 (the "check-the-box" election), but the company missed the filing deadline. It asked the IRS for a late-election extension under regulation section 301.9100-3, which the IRS grants when the taxpayer acted reasonably and in good faith and relief will not prejudice the government. The IRS concluded those standards were met and gave the company 120 days to file Form 8832 electing disregarded status effective the requested date. The letter notes a limitation: if the election would change any U.S. shareholder's section 965 (transition tax) amounts, it is disregarded for that purpose under the regulations. This is the standard cure for a missed entity-classification election.

Ruling snapshot

• Question: Should the foreign company get an extension of time under Treas. Reg. § 301.9100-3 to file a late Form 8832 electing to be a disregarded entity?
• Outcome: Approved (120-day extension granted)
• Key authorities: Treas. Reg. §§ 301.7701-3, 301.9100-1 through 301.9100-3, 1.965-4(c)(2)

Full text (IRS public release)

 Internal Revenue Service                                       Department of the Treasury
                                                                Washington, DC 20224

 Number: 202451001                                              Third Party Communication: None
 Release Date: 12/20/2024                                       Date of Communication: Not Applicable
 Index Numbers: 7701.00-00, 9100.00-00,
               9100.31-00                                       Person To Contact:
                                                                -------------------------, ID No. -----------------
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 ----------------------------------------------                 Telephone Number:
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 ------------------------------                                 Refer Reply To:
 ----------------------------------                             CC:PSI:3
                                                                PLR-103355-24
                                                                Date:
                                                                August 20, 2024




LEGEND

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

Country           =        ---------

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




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

        This letter responds to a letter dated February 15, 2024, 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 to be
classified as a disregarded entity for federal tax purposes.

                                                     FACTS

      The information submitted states that Company was formed under the laws
of Country on Date. Company represents that it is a foreign entity eligible to elect to be
disregarded as an entity separate from its owner for federal tax purposes effective Date.
However, Company failed to timely file a Form 8832, Entity Classification Election,
 PLR-103355-24                               2


electing to be disregarded as an entity separate from its owner for federal tax purposes
effective Date.
                                 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. 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)(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 (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 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-103355-24                               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 grant of 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.

        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.

         We express or imply no opinion concerning the assessment of any interest,
additions to tax, additional amounts, or penalties for failure to file a timely income tax or
information return with respect to any taxable year that may be affected by this ruling.
For example, we express or imply no opinion as to whether a taxpayer is entitled to
relief from any penalty on the basis that the taxpayer had reasonable cause for failure to
file timely any income tax or information returns.

      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-103355-24                                          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 requested ruling, it is subject to verification on examination.

                                                 Sincerely,

                                               Associate Chief Counsel
                                               (Passthroughs & Special Industries)



                                           By:                    /s/
                                                 Mary Beth Carchia
                                                 Senior Technician Reviewer, Branch 3
                                                 Office of the Associate Chief Counsel
                                                 (Passthroughs & Special Industries)


Enclosure:
      Copy of this letter for § 6110 purposes




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