Late qualified opportunity fund certification accepted

Plain-English summary

A partnership intended to self-certify as a qualified opportunity fund beginning in a particular month. Its original accountant incorrectly concluded that no federal return was required and did not know that the partnership needed to file a return with Form 8996 to make the certification. A later opportunity-zone adviser discovered the omission, prepared the return and form, and sought relief. The IRS found reasonable reliance on a tax professional, good faith, and no prejudice to the government. It treated the filed Form 8996 as timely and accepted the self-certification from the intended month, without deciding whether the partnership otherwise met the QOF requirements.

Ruling snapshot

• Question: May the partnership's late Form 8996 self-certification as a qualified opportunity fund be treated as timely?
• Outcome: Approved because the partnership reasonably relied on an accountant and relief did not prejudice the government
• Key authorities: IRC § 1400Z-2; Treas. Reg. §§ 1.1400Z2(d)-1(a)(2)(i), 301.9100-1, 301.9100-2, 301.9100-3

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 202532009
Release Date: 8/8/2025
Index Number: 1400Z.02-00, 9100.00-00

Person To Contact:
---------------------, ID No. -----------------
Telephone Number:

Refer Reply To:
CC:ITA:B08
PLR-120970-24
Date:
May 08, 2025

LEGEND

Taxpayer = -----------------------------------------------------------

Accountant P = -----------------------------

Accountant Q = -----------------------

Month 1 = -------------------------

Month 2 = -------------------------

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

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

Date 3 = ----------------

Date 4 = --------------------------

State = -------------

Year 1 = -------

Member A = ------------------------------------------------------------------

PLR-120970-24 2

Member B = ------------------------------------------

X = --------

Y = ----

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

This letter responds to Taxpayer's request for a letter ruling dated Date 4. Specifically,
Taxpayer requests relief under §§ 301.9100-1 and 301.9100-31 for an extension of time
to make an election to self-certify as a qualified opportunity fund (QOF), as defined in
section 1400Z-2(d), effective as of Month 1.

FACTS

According to the information and representations provided, Taxpayer, a limited liability
Company (LLC) treated as a partnership for Federal income tax purposes, was formed
on Date 1 in State. Pursuant to the terms of the LLC operating agreement, Taxpayer
was formed for the primary purpose of investing into, holding, managing, and disposing
of qualified opportunity zone property, and to do anything and all things permitted by
section 1400Z-2 and the regulations thereunder necessary or appropriate for this
purpose. The operating agreement further states that Taxpayer will self-certify as a
QOF by filing Form 8996, Qualified Opportunity Fund, with the Taxpayer’s federal tax
return for the taxable year in which the certification is made. Taxpayer represents that it
operates on a calendar year tax year and utilizes the cash method of accounting. On its
Form 1065, U.S. Return of Partnership Income, for its Year 1 taxable year, Taxpayer
indicated that Taxpayer had two members in Year 1, Member A and Member B, who
owned X and Y percent, respectively, of the interests in Taxpayer.

Taxpayer represents that it intended to elect to self-certify as a QOF beginning in Month

1. Taxpayer engaged Accountant P to prepare Taxpayer’s Federal income tax returns
   for Year 1 and subsequent years. Accountant P represents that based on information
   received from Member B, Accountant P determined that Taxpayer was not required to
   file a federal income tax return for Year 1. Accountant P further represents that due to
   being unfamiliar with the requirements under section 1400Z-2, Accountant P failed to
   advise Taxpayer of the necessity to file a federal income tax return in order to self-
   certify Taxpayer as a QOF. As such, Taxpayer did not timely file a federal income tax
   return and Form 8996 for Year 1.

Taxpayer represents that on Date 2, it engaged Accountant Q to consult on opportunity
zone compliance and consulting. Taxpayer represents that after conversing with

1 Unless otherwise specified, all “section” references are to sections of the Internal Revenue Code (Code)
and all “§” references to sections of the Treasury Regulations (26 CFR Part 1) or (26 CFR Part 301).

PLR-120970-24 3

Accountant Q, Taxpayer learned in Month 2 of its failure to timely file a Form 8996 to
self-certify Taxpayer as a QOF. Subsequently, Taxpayer engaged Accountant Q to
prepare a federal income tax return and Form 8996 for Year 1, which Taxpayer
represents filing on Date 3. Taxpayer proceeded to also engage Accountant Q to file
this request for a private letter ruling.

Taxpayer represents that all its federal income tax returns have been filed consistent
with the intended election to self-certify as a QOF and the granting of its requested
ruling would not result in Taxpayer having a lower tax liability in the aggregate for Year
1 and all subsequent taxable years affected by the election than if the election had been
timely made.

LAW AND ANALYSIS

Section 1400Z-2(e)(4) directs the Secretary to prescribe such regulations as may be
necessary to carry out the purposes of section 1400Z-2, including rules for the
certification of QOFs. Section 1.1400Z2(d)-1(a)(2)(i) of the Income Tax Regulations
provides that the self-certification of a QOF must be timely-filed and effectuated
annually in such form and manner as may be prescribed by the Commissioner of
Internal Revenue in the Internal Revenue Service (Service) forms or instructions, or in
publications or guidance published in the Internal Revenue Bulletin. The Instructions to
Form 8996 published pursuant to these regulations specify that to self-certify as a QOF,
a taxpayer must file Form 8996 with its tax return for the year to which the certification
applies by the due date of the tax return (including extensions).

Section 301.9100-3(a) of the Procedure and Administration Regulations provides that
requests for extensions of time for regulatory elections (other than automatic extensions
covered in § 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(b)(1) provides that a taxpayer is deemed to have acted reasonably
and in good faith if the taxpayer—

(i) requests relief before the failure to make the regulatory election is discovered
by the Service;

(ii) failed to make the election because of intervening events beyond the
taxpayer's control;

(iii) failed to make the election because, after exercising reasonable diligence,
the taxpayer was unaware of the necessity for the election;

(iv) reasonably relied on the written advice of the Service; or

PLR-120970-24 4

(v) reasonably relied on a qualified tax professional, and the professional failed to
make, or advise the taxpayer to make, the election.

In addition, § 301.9100-3(b)(3) provides that a taxpayer is deemed not to have acted
reasonably and in good faith if the taxpayer—

(i) seeks to alter a return position for which an accuracy-related penalty has been
or could be imposed under § 6662 at the time the taxpayer requests relief, and
the new position requires or permits a regulatory election for which relief is
requested;

(ii) was fully informed in all material respects of the required election and related
tax consequences but chose not to make the election; or

(iii) uses hindsight in requesting relief (if specific facts have changed since the
original deadline that make the election advantageous to a taxpayer, the Service
will not ordinarily grant relief).

Section 301.9100-3(c)(1) provides that the Commissioner will grant a reasonable
extension of time to make the regulatory election only when the interests of the
Government will not be prejudiced by the granting of relief. Section 301.9100-3(c)(1)(i)
provides that the interests of the Government are prejudiced if granting relief would
result in a taxpayer having a lower tax liability in the aggregate for all taxable years
affected by the election than the taxpayer would have had if the election had been
timely made (taking into account the time value of money).

CONCLUSION

The information and representations provided indicates that Taxpayer did not timely file
its Form 8996 by the due date of its federal income tax return for Year 1 due to
Taxpayer’s reasonable reliance on Accountant P and Accountant P’s failure to file a
Form 8996 on behalf of Taxpayer. Based on the facts and information submitted and
the representations made, including affidavits and representations under penalties of
perjury, we conclude that Taxpayer has acted reasonably and in good faith, and that the
granting of relief will not prejudice the interests of the Government. Accordingly, based
solely on the facts and information submitted, and the representations made in the
ruling request, the Form 8996 attached to Taxpayer’s return for Year 1, filed Date 4, is
considered timely filed, and Taxpayer has thereby made the election under section
1400Z-2 and § 1.1400Z2(d)-1(a)(2)(i) to self-certify as a QOF beginning Month 1.
Taxpayer should submit a copy of this letter ruling to the Service Center where
Taxpayer files its returns along with a cover letter requesting that the Service associate
this ruling with the Year 1 tax return.

PLR-120970-24 5

CAVEATS

The granting of an extension of time in this ruling letter is not a determination that
Taxpayer is otherwise eligible to self-certify as a QOF. See § 301.9100-1(a).

This ruling is based upon facts and representations submitted by the Taxpayer and
accompanied by penalty of perjury statements executed by the appropriate parties.
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.

Except as expressly provided herein, no opinion is either expressed or implied
concerning the tax consequences of any aspect of any transaction or item discussed or
referenced in this letter. Specifically, we have no opinion, either express or implied,
concerning whether any investments made in Taxpayer are qualifying investments as
defined in § 1.1400Z2(a)-1(b)(34) or whether Taxpayer meets the requirements under
section 1400Z-2 and the regulations thereunder to be treated as a QOF. In addition, we
also express no opinion on whether any interest owned in any entity by Taxpayer
qualifies as qualified opportunity zone property, as defined in section 1400Z-2(d)(2), or
whether such entity would be treated as a qualified opportunity zone business, as
defined in section 1400Z-2(d)(3). We express no opinion regarding the tax treatment of
the instant transaction under the provisions of any other sections of the code or
regulations that may be applicable, or regarding the tax treatment of any conditions
existing at the time of, or effects resulting from, the instant transaction.

A copy of this letter must be attached to any 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.

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. Enclosed is a copy of the letter ruling
showing the deletions proposed to be made when it is disclosed under section 6110.

Pursuant to the Form 2848, Power of Attorney and Declaration of Representative, on
file, we are sending a copy of this letter to Taxpayer's authorized representatives.

PLR-120970-24 6

Sincerely,

Dominic D. DiMattia
Assistant to the Branch Chief, Branch 8
Office of Chief Counsel
(Income Tax & Accounting)

cc: --------------------------------------------------------