9100 relief to file two late "check-the-box" elections classifying foreign subsidiaries as disregarded

Plain-English summary

This letter gives a company extra time to make two late "check-the-box" entity classification elections. A U.S. corporation that had elected S corporation status indirectly owned two foreign subsidiaries, each eligible to be treated as a "disregarded entity" (not separate from its owner for tax purposes), but neither filed the required Form 8832 on time. Under Treasury Regulation Section 301.9100-3, the IRS can grant more time for a missed election if the taxpayer acted reasonably and in good faith and relief will not harm the government. The IRS found those standards met and granted each subsidiary 120 days from the date of the letter to file Form 8832 electing disregarded-entity treatment as of the intended date. The relief is conditioned on the entities and their owners filing all consistent federal returns and information returns (such as Forms 5471, 8865, and 8858) within the same 120 days. As usual, the IRS cautioned that granting more time is not a ruling that the entities are actually eligible to make the elections.

Ruling snapshot

• Question: May two foreign subsidiaries get an extension of time to file late Forms 8832 electing to be treated as disregarded entities?
• Outcome: approved (120-day extension granted to each)
• Key authorities: Treas. Reg. §§ 301.9100-1, -3; Treas. Reg. § 301.7701-3

Full text (IRS public release)

 Internal Revenue Service                                       Department of the Treasury
                                                                Washington, DC 20224

 Number: 202503008                                              Third Party Communication: None
 Release Date: 1/17/2025                                        Date of Communication: Not Applicable
 Index Number: 7701.00-00, 9100.31-00
                                                                Person To Contact:
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 ------------------------                                       Refer Reply To:
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                                                                PLR-108640-24
                                                                PLR-108642-24
                                                                Date:
                                                                October 08, 2024




                                                   LEGEND

 X             = ---------------------------------------------
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 Entity 1      = ---------------------------------------------
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 Entity 2      = ---------------------------------------------
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 Country       = ------------

 Date 1        = ----------------------
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 Date 2        = ---------------------------


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

This responds to a letter dated January 25, 2024, requesting an extension of time under
§ 301.9100-3 of the Procedure and Administration Regulations to file entity classification
elections under § 301.7701-3.
PLR-108640-24 and PLR-108642-24                2

                                           FACTS

The information submitted states that X is a U.S. corporation that filed an election under
§ 1362(a) of the Internal Revenue Code to be treated as an S corporation effective
Date 1. X indirectly owns all the interests in subsidiaries Entity 1 and Entity 2.

Entity 1 was formed under the laws of Country on Date 2. Entity 1 represents that it is a
foreign entity eligible to elect to be classified as a disregarded entity effective Date 2.
However, Entity 1 failed to timely file Form 8832, Entity Classification Election, electing
to classify Entity 1 as a disregarded entity effective Date 2.

Entity 2 was formed under the laws of Country on Date 2. Entity 2 represents that it is a
foreign entity eligible to elect to be classified as a disregarded entity effective Date 2.
However, Entity 2 failed to timely file Form 8832, Entity Classification Election, electing
to classify Entity 2 as a disregarded entity effective Date 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)(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. If an
PLR-108640-24 and PLR-108642-24               3

election specifies an effective date more than 75 days prior to the date on which the
election is filed, it will be effective 75 days prior to the date it was filed.

Section 301.9100-1(c) provides that the Commissioner in exercising the
Commissioner's discretion may grant a reasonable extension of time under the rules set
forth in §§ 301.9100-2 and 301.9100-3 to make a regulatory election, or a statutory
election (but not 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 the 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 guidelines for granting extensions of time for making
elections that do not meet the requirements of § 301.9100-2. Section 301.9100- 3(a)
provides that requests for relief subject to § 301.9100-3 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.

                                      CONCLUSION

Based solely on the facts submitted and the representations made, we conclude that
the requirements of §§ 301.9100-1 and 301.9100-3 have been satisfied. As a result:

Entity 1 is granted an extension of time of 120 days from the date of this letter to make
an election to be treated as a disregarded entity for federal tax purposes effective Date
2.

Entity 2 is granted an extension of time of 120 days from the date of this letter to make
an election to be treated as a disregarded entity for federal tax purposes effective Date
2.

Each entity described above must make the election by filing a properly executed Form
8832 with the appropriate service center. A copy of this letter should be attached to the
Form 8832.

This ruling is contingent on each entity described above and its owner(s) filing, within
120 days of the date of this letter, to the extent necessary or appropriate, all required
PLR-108640-24 and PLR-108642-24               4

federal income tax returns and information returns (including amended returns)
consistent with the requested relief granted in this letter. These returns may include, but
are not limited to, the following forms: (i) Form 5471, Information Return of U.S. Persons
With Respect to Certain Foreign Corporations, (ii) Form 8865, Return of U.S. Persons
With Respect to Certain Foreign Partnerships, and (iii) Form 8858, Information Return
of U.S. Persons With Respect to Foreign Disregarded Entities, such that these forms
reflect the consequences of the relief granted in this letter. A copy of this letter should
be attached to any such returns.

If applicable, the elections made by each entity described above are disregarded for
purposes of determining the amounts of all § 965 elements of all United States
shareholders of each entity described above if the election otherwise would change the
amount of any § 965 element of any such United States shareholder. See § 1.965-
4(c)(2).

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 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.

In addition, we express 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 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.

The ruling contained in this letter is based on 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 to the taxpayer requesting it. Section 6110(k)(3) provides that it
may not be used or cited as precedent.
PLR-108640-24 and PLR-108642-24                      5

In accordance with a power of attorney on file with this office, we are sending a copy of
this letter ruling to your authorized representative.


                                               Sincerely,


                                               Holly Porter
                                               Associate Chief Counsel
                                               (Passthroughs & Special Industries)



                                        By: _____________________________
                                            Jennifer N. Keeney
                                            Senior Counsel, Branch 1
                                            Office of Associate Chief Counsel
                                            (Passthroughs & Special Industries)

Enclosure
      Copy of letter for § 6110 purposes



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