JournalofAccountancy
IRSProvidesGuidanceonLateEntityClassificationElections
September3,2009
TheIRSonThursdayreleasedRevenueProcedure200941(http://twurl.nl/ax6krg),givingeligibleentitiesguidanceonhowtoobtainreliefwhentheymakealate
entityclassificationelection.Thereliefisavailableforthreeyearsand75daysaftertherequestedeffectivedateoftheeligibleentitysclassificationelection.
Underthechecktheboxregulations,businessesthatarenotclassifiedascorporationscanelectforfederaltaxpurposestobetreatedasanassociationora
partnership,or(ifthebusinesshasasingleowner)itcanelecttobedisregardedasanentityseparatefromitsowner.Thebusinessmakestheelectionbyfiling
Form8832,EntityClassificationElection,withtheIRSServiceCenterdesignatedontheform.Ifitisrequiredtofileafederaltaxorinformationreturnforthetax
yearthattheelectionismade,itmustalsoattachacopyoftheformtoitstaxreturnfortheyearthatitwantstomaketheelection.
Initsnewguidance,theIRSextendsthedateforentitiestomakeaninitialclassificationelectionortochangeaclassificationelection.Tobeeligibleforthe
extendedlateelectionrelief,thebusinessmusthavefailedtoobtainitsdesiredclassificationsolelybecauseitfailedtotimelyfileForm8832andeitherithasnot
filedafederaltaxorinformationreturnforthefirstyearinwhichtheelectionwasintendedbecausetheduedatehasnotpassedoritmusthavefiledallitsrequired
federalreturns(sincethetimeoftheintendedelection)consistentwiththeclassificationitintendedtoobtain.
Tomakealateelectionundertheprovisionsoftherevenueprocedure,aneligibleentitymustfileacompletedForm8832withtheapplicableIRSServiceCenter
withinthreeyearsand75daysoftheeffectivedateoftheelection,alongwithastatementexplainingthereasonforitsfailuretomaketheelectionontime.The
IRSwillnotifytheentityifitisgrantingthelateelectionrelief.
Entitiesthatwanttoobtainlateelectionreliefthroughaletterrulingrequest(becausetheydonotmeettheeligibilityrequirementsintherevenueprocedure)must
includethisrepresentationwiththeletterrulingrequest:
AllrequiredU.S.taxandinformationreturnsoftheentity(or,iftheentitywasnotrequiredtofileanysuchreturnsunderthedesiredclassification,thenall
requiredU.S.taxandinformationreturnsofeachaffectedpersonasdefinedinSection4.02ofRev.Proc.200939)werefiledtimelyorwithin6monthsof
theduedateoftherespectivereturn(excludingextensions)asiftheentityclassificationelectionhadbeenineffectontherequesteddate.NoU.S.taxor
informationreturnswerefiledinconsistentlywiththosedescribedinthepriorsentence.
RevenueProcedure200941iseffectiveSept.28,2009,forrequestspendingwiththeIRSonthatdateandrequestsmadeafterthatdate.
2017AmericanInstituteofCPAsAllRightsReserved
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