IRS written determination 201440015

Private letter rulings and published taxpayer determination letters. Native document type is retained separately; a determination letter is not labeled a private letter ruling. These taxpayer-specific releases cannot be used or cited as precedent under 26 USC 6110(k)(3); applicability and current legal force are not independently certified. Keep repeated UILC subjects attached to one actual numbered document.

Internal Revenue Service
Department of the Treasury
Washington, DC 20224
Number: 201440015
Release Date: 10/3/2014
Index Number: 831.00-00, 9100.00-00
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Third Party Communication: None
Date of Communication: Not Applicable
Person To Contact:
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Telephone Number:
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Refer Reply To:
CC:FIP:B04
PLR-146956-13
Date:
March 26, 2014
Legend
Parent=-------------------------------------------
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Taxpayer=--------------------------------
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Tax Year A=------
Date A=--------------------------
Date B=--------------------------
Date C=--------------------
Date D=--------------------
Date E=--------------------
Date F=------------------
Date G=------------------
Date H=---------------------------
State A=-------------------
Employee A=-----------------
Employee B= ---------------------

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Firm=---------------------------------------
Dear ---------------------:
This is in response to a request submitted on behalf of Taxpayer for a ruling
granting an extension of time for making an election under § 831(b) of the Internal
Revenue Code pursuant to § 301.9100-3 of the Procedure and Administrative
Regulations, to be effective for Tax Year A.
The ruling contained in this letter is based upon information and representations
submitted by 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
supportof the ruling request, it is subject to verification on examination.
FACTS
Taxpayer represents that it was incorporated on Date A and licensed to issue
property and casualty insurance contracts on Date B under the laws of State A.
Taxpayer represents that it qualifies as an insurance company for federal income tax
purposes making it eligible to elect to be taxed pursuant to § 831(b). The sole
shareholder of Taxpayer is Parent.
Firm is an external tax advisor to Parent and to its related companies which
includes Taxpayer. Employee A of Parent specialized in financial accounting which
includes assisting with tax compliance. Employee A was placed in charge of
overseeing the filing of a paper Form 7004 (Application for Automatic Extension of Time
to File Certain Business Income Tax, Information and Other Returns) for Taxpayer’s tax
year ended on Date B. Employee A was not responsible for filing Form 7004 for the
prior tax year. Employee A knew that Firm had electronically filed Forms 7004 for other
related companies. Firm sent Taxpayer’s Form 7004 and a transmittal letter dated Date
C to Employee B on Date D. Employee A did not understand that the paper Form 7004
for Taxpayer that was enclosed with the letter was the Form 7004 that Taxpayer was to
file on or before Date E.
Employee A became aware that Taxpayer’s paper Form 7004 had not been filed
timely shortly before Date F when the employee was reviewing state tax forms that were
required to be filed by Date G. Taxpayer’s paper Form 7004 was included in these
extensions and Employee A saw the mailing instructions from Firm. Employee A
believed Firm had already e-filed the Form 7004. Employee A contacted a member of
the Firm to inform them that the Form 7004 had not been timely filed. Employee A was
told that Taxpayer should request relief under § 301.9100 to make the § 831(b) election.
Taxpayer filed its Form 1120PC on Date H for Tax Year A.

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The following representations are made in connection with the request for the
extension of time.
1.The request for relief was filed before the failure to make the
regulatory election was discovered by the Internal Revenue Service.
2.The granting of relief by the Internal Revenue Service will not result
in a lower tax liability than Taxpayer would have hadif the § 831(b) election was
timely made.
3.Taxpayer does not seek to alter a return position for which the
accuracy related penalty has been or could have been imposed under § 6662 at
the time Taxpayer requested relief, and the new position requires or permits a
regulatory election for which relief is requested.
4.Taxpayer failed to file the election inadvertently. Taxpayer has not
used hindsight to seek an extension of time to make the election. Taxpayer
always had the intent to make the § 831(b) election. Taxpayer was advised by
tax professionals regarding making the § 831(b) election and the timely filing of
Form 7004.
LAW and ANALYSIS
Insurance companies other than life insurance companies are taxable under
§ 831. However, certain insurance companies can elect to pay an alternative tax
provided in § 831(b) on only their taxable investment income. Section 831(b)(2)(A)(ii)
requires that a company elect the application of the alternative tax imposed by § 831(b).
Pursuant to § 301.9100-8(a)(2)(i), thiselection must be made by the due date (taking
into account any extensions of time to file obtained-by the taxpayer) for the first taxable
year for which the election is effective.
Under § 301.9100-1(c), the Commissioner may grant reasonable extension of
time pursuant to §§ 301.9100-2 and 301.9100-3 to make a regulatory election (but no
more than 6 months except in the case when the taxpayer is abroad), under all subtitles
of the Code except subtitles E, G, H and I. Section 831(b) is part of subtitle A.
Section 301.9100-3 provides that requests for extensions of time for regulatory
elections that do not meet the requirements of § 301.9100-2 (automatic extension) must
be made pursuant to § 301.9100-3. Under § 301.9100-3(a), relief will be granted when
the taxpayer provides the evidence 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.
Under § 301.9100-3(b)(1), a taxpayeris deemed to have acted reasonably and in
good faith if the taxpayer: (i) requests relief under this section before the failure to make
the regulatory election is discovered by the Internal Revenue Service; (ii) failed to make
the election because of intervening events beyond the taxpayer’s control: (iii) failed to

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make the election because, after exercising reasonable diligence (taking into account
the taxpayer’s experience and the complexity of the return or issue), the taxpayer was
unaware of the necessity for the election; (iv) reasonably relied on the advice of the
Internal Revenue Service; or (v) reasonably relied on a qualified tax professional,
including a tax professional employed by the taxpayer and the tax professional failed to
make or advise the taxpayer to make the election.
Under § 301.9100-3(b)(2), a taxpayer will not be considered to have reasonably
relied on a qualified tax professional if the taxpayer knew or should have known that the
professional was not competent to render advice on the regulatory election or was not
aware of all relevant facts.
Under § 301.9100-3(c)(1), the interests of the government are not prejudiced if
the tax liability in the aggregate for all taxable years affected by the election will not be
lower by grantingthe relief than if the election had been timely made (taking into
account the time value of money).
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. Taxpayer
requested relief under these provisions before the failure to make the regulatory election
was discovered by the Service, and Taxpayer reasonably relied on a qualified tax
professional.
RULING
Taxpayer is granted an extension of time until 60days following the date of this
letter to make the election to be subject to the alternative tax provided in § 831(b)(2)(A)
for Year A.
CAVEATS
Notwithstanding that an extension of time is granted under § 301.9100-3 to make
an election under § 831(b)(2)(A), additions, penalties and interest that would otherwise
be applicable, if any, continue to apply with respect to the tax return for Year.
No ruling has been requested, and no opinion is expressed (or implied) whether
Taxpayer is engaged in the issuing of insurance or annuity contracts or the reinsuring of
risks underwritten by insurance companies; or whether Taxpayer qualifies as an
insurance company under § 831(c) for Year.
A copy of this ruling letter should be attached with Taxpayer’s federal income tax
return.

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This ruling is directed only to the taxpayer who requested it. Section 6110 (k)(3)
provides that it may not be used or cited as precedent.
Pursuant to a power of attorney on file in this office, a copy of this ruling is being
furnished to your authorized representative.
Sincerely,
SHERYL B. FLUM
Branch Chief, Branch 4
Office of Associate Chief Counsel
(Financial Institutions & Products)

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