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Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 2834
Experience:  18+ years of experience in tax preparation; 25+ years of experience as a real estate/corporate paralegal.
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I need to file a late change of election under Rev Proc

Customer Question

I need to file a late change of election under Rev Proc 2009-41. we meet the criteria. I am concerned though that we are making the election so late. we currently are a foreign eligible entity treated as a partnership. the partnership has two partners both partners expatriated from the US at October 31, 2015.
JA: The Accountant will know how to help. Is there anything else the Accountant should be aware of?
Customer: will I be speaking to someone right now?
Submitted: 2 months ago.
Category: Tax
Customer: replied 2 months ago.
Being that the deadline for submitting a return is September 15, this late election is very close to the deadline for submitting a return. the reason for the late submission is a miscommunication btwn management on how the return should be done. it was only realized last week, so we are having the return prepared in line with what is US taxable income for the partners (which would end at October 31, 2015). The partnership has no US source income.
Customer: replied 2 months ago.
Posted by JustAnswer at customer's request) Hello. I would like to request the following Expert Service(s) from you: Live Phone Call. Let me know if you need more information, or send me the service offer(s) so we can proceed.
Customer: replied 2 months ago.
actually, please chat with me over live chat. do not call me. thanks
Expert:  Barbara replied 2 months ago.

Welcome to Just Answer. My name is ***** ***** I will be happy to assist you.

The criteria for a late classification election are as follows:

Eligibility for relief. An entity is eligible for relief under Section 4.03 of this revenue procedure for a late classification election if the following requirements are met:

(1)(a) the entity failed to obtain its requested classification as of the date of its formation or upon the entity’s classification becoming relevant within the meaning of §(###) ###-####3(d) solely because Form 8832 was not filed timely under §(###) ###-####3(c)(1)(iii); or

(b) the entity failed to obtain its requested change in classification (subject to the limitations of §(###) ###-####3(c)(1)(iv)) solely because Form 8832 was not filed timely under §(###) ###-####3(c)(1)(iii); and

(2)(a) the eligible entity seeking an extension of time to make an entity classification election has not filed a federal tax or information return for the first year in which the election was intended because the due date has not passed for that year’s federal tax or information return; or

(b) the eligible entity seeking an extension of time to make an entity classification election timely filed all required federal tax returns and information returns consistent with its requested classification for all of the years the entity intended the requested election to be effective and no inconsistent tax or information returns have been filed by or with respect to the entity during any of the taxable years. For changes in an eligible entity’s classification election, consistent filing of returns includes filing returns consistent with the deemed treatment of elective changes under §(###) ###-####3(g). Under this revenue procedure, if the eligible entity is not required to file a federal tax return or information return, each affected person, who is required to file a federal tax return or information return, must have timely filed all such returns consistent with the entity’s requested classification for all of the years the entity intended the requested election to be effective and no inconsistent tax or information returns have been filed during any of the taxable years. Solely for purposes of this section 4.01(2)(b), an entity and an affected person will be treated as having timely filed a required tax or information return if the return is filed within 6 months after its due date, excluding extensions. An indirect owner of an eligible entity (such as a partner in a partnership that holds an interest in the eligible entity) is not an affected person if an entity in which the indirect owner holds a direct or indirect interest would be required to attach a copy of the eligible entity’s Form 8832 to its federal tax or information return in the circumstances described in section 4.01(2)(b)(i) or (ii) . An affected person is either:

(i) with respect to the effective date of the eligible entity’s classification election, a person who would have been required under §(###) ###-####3(c)(1)(ii) to attach a copy of the Form 8832 for the eligible entity to its federal tax or information return for the taxable year of the person which includes that date; or

(ii) with respect to any subsequent date after the entity’s requested effective date of the classification election, a person who would have been required under §(###) ###-####3(c)(1)(ii) to attach a copy of the Form 8832 for the eligible entity to its federal tax or information return for the person’s taxable year that includes that subsequent date had the election first become effective on that subsequent date; and

(3) the eligible entity has reasonable cause for its failure to timely make the entity classification election; and

(4) 3 years and 75 days from the requested effective date of the eligible entity’s classification election have not passed.

.02 Procedural requirements for requesting relief. Within 3 years and 75 days from the requested effective date of the eligible entity’s classification election, the eligible entity must file with the applicable IRS service center (determined in accordance with the instructions to Form 8832) a completed Form 8832, signed in accordance with §(###) ###-####3(c)(2). The Form 8832 must indicate that it is being filed pursuant to this revenue procedure in accordance with the Form 8832 and accompanying instructions. The Form 8832 must include both a declaration that the elements required for relief in Section 4.01 of this revenue procedure have been satisfied and a statement explaining the reason for the failure to file a timely entity classification election (referred to as “the reasonable cause statement”). (Until Form 8832 is modified to include the declaration contained in this revenue procedure and space for a reasonable cause statement, the eligible entity should write “Filed Pursuant to Rev. Proc. 2009-41” at the top of Form 8832 and attach both the declaration and the reasonable cause statement to its Form 8832 that is filed with the applicable IRS service center. The declaration and reasonable cause statement must be accompanied by a dated declaration, signed by an authorized representative of the eligible entity and the affected person(s), if any, which states: “Under penalties of perjury, I (we) declare that I (we) have examined this election, including accompanying documents, and, to the best of my (our) knowledge and belief, the election contains all the relevant facts relating to the election, and such facts are true, correct, and complete.” The individual or individuals who sign must have personal knowledge of the facts and circumstances related to the election. The copy of the Form 8832 that is required under §301.7701-3(c)(1)(ii) to be attached to either the eligible entity’s or the affected person’s return does not need the writing at the top of the Form 8832 or the attachments described in this section 4.02.)

.03 Relief for late entity classification elections . Upon receipt of a completed Form 8832 requesting relief under Section 4.01 of this revenue procedure, the IRS service center will determine whether the requirements for granting the late entity classification election have been satisfied and will notify the entity of the result of its determination. An entity receiving relief under this revenue procedure is treated as having made a timely entity classification election as of the requested effective date of the election.

.04 Eligible entities that do not meet all of the eligibility requirements under Section 4.01 of this revenue procedure. Eligible entities requesting a letter ruling because they do not meet all of the eligibility requirements of Section 4.01 of this revenue procedure must include either the following representation as part of the entity’s request for a letter ruling or an explanation regarding why they do not qualify to do so: “All required U.S. tax and information returns of the entity (or, if the entity was not required to file any such returns under the desired classification, then all required U.S. tax and information returns of each affected person as defined in Section 4.02 of Rev. Proc. 2009-41) were filed timely or within 6 months of the due date of the respective return (excluding extensions) as if the entity classification election had been in effect on the requested date. No U.S. tax or information returns were filed inconsistently with those described in the prior sentence.”

https://www.irs.gov/irb/2009-39_IRB/ar17.html#d0e6036

As long as you meet the criteria, there should be no concern on your part.

Please let me know if I can assist you further.

Thank you and best regards,

Barb

Expert:  Barbara replied 2 months ago.

Just following up with you to see if you have any other questions. If so, please let me know so I can further assist you.

Best regards,

Barb

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