9100 relief to file a late entity election treating a foreign entity as a partnership

Plain-English summary

A business entity can choose how it is taxed by "checking the box" on Form 8832, an election called an entity classification election. A foreign entity that is eligible can elect to be treated as a partnership for U.S. tax purposes, but the election has to be filed on time. Here, a foreign entity organized abroad wanted partnership treatment effective a specific date, but it never filed the required Form 8832 by the deadline. It asked the IRS for more time under Treasury Regulation Section 301.9100-3, which lets the Commissioner extend a missed regulatory election when the taxpayer acted reasonably and in good faith and granting relief will not harm the government's interests. The IRS found those standards met and gave the entity 120 days from the date of the letter to file Form 8832 electing partnership treatment as of the requested date. The relief only covers the filing deadline; the IRS did not decide whether the entity is otherwise eligible to make the election, and the partnership election is disregarded for certain Section 965 calculations.

Ruling snapshot

• Question: May a foreign entity get an extension of time to file a late Form 8832 electing to be treated as a partnership?
• Outcome: approved (120-day extension granted to file the election)
• Key authorities: Treas. Reg. § 301.7701-3(b), (c); Treas. Reg. §§ 301.9100-1, -3

Full text (IRS public release)

 Internal Revenue Service                                         Department of the Treasury
                                                                  Washington, DC 20224

 Number: 202504010                                                Third Party Communication: None
 Release Date: 1/24/2025                                          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-109228-24
                                                                  Date:
                                                                  October 25, 2024




LEGEND

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

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

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

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



Dear ---------:

       This responds to a letter dated May 9, 2024, and subsequent correspondence,
submitted on behalf of X by X’s authorized representative, requesting an extension of
time under § 301.9100-3 of the Procedure and Administration Regulations to file an
election under § 301.7701-3(c) to be treated as a partnership for federal tax purposes.

                                                     FACTS

        According to the information submitted, X was organized under the laws of
Country on Date 1. X represents that it is a foreign entity eligible to elect to be treated
as a partnership for federal tax purposes effective Date 2. However, X failed to timely
file Form 8832, Entity Classification Election, electing to be treated as a partnership for
federal tax purposes effective Date 2.
PLR-109228-24                                  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. 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 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 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.

       Under § 301.9100-1(c), the Commissioner may grant a reasonable extension of
time to make a regulatory election, or a statutory election (but no more than six months
except in the case of a taxpayer who is abroad), under all subtitles of the Internal
Revenue Code, except subtitles E, G, H, and 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, or a revenue ruling, revenue procedure,
notice, or announcement published in the Internal Revenue Bulletin.

       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 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.

      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
PLR-109228-24                                 3

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 representations made, we conclude
that the requirements of § 301.9100-3 have been satisfied. As a result, X is granted an
extension of time of 120 days from the date of this letter to make an election to be
treated as a partnership for federal tax purposes effective Date 2. X should 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.

         This ruling is contingent on X and the owners of X filing within 120 days of this
letter all required returns for all open years consistent with the requested relief. These
returns may include, but are not limited to, the following forms: (i) Forms 5471,
Information Return of U.S. Persons With Respect to Certain Foreign Corporations, (ii)
Forms 8865, Return of U.S. Persons With Respect to Certain Foreign Partnerships, and
(iii) Forms 8858, Information Return of U.S. Persons With Respect to 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 election to classify X as a partnership effective Date 2 is
disregarded for purposes of determining the amounts of all section 965 elements of all
United States shareholders of X 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 no opinion concerning the
federal tax consequences of the facts described above under any other provision of the
Internal Revenue Code. 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 no opinion concerning the assessment of any interest, additions to
tax, additional amounts, or penalties for failure to file a timely 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 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.
PLR-109228-24                                            4

      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.

         In accordance with the Power of Attorney on file with this office, a copy of this
letter is being sent to X’s authorized representatives.


                                                    Sincerely,

                                                    Holly Porter
                                                    Associate Chief Counsel
                                                    (Passthroughs & Special Industries)



                                              By: ___________/S/__________________
                                                  Caroline Hay
                                                  Senior Technician Reviewer, Branch 1
                                                  Office of Associate Chief Counsel
                                                  (Passthroughs & Special Industries)


Enclosure:

       Copy of this letter for section 6110 purposes
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