Revenue Procedure 2009-41

Qualified State

Amount Allocated

Virginia
West Virginia
EFFECTIVE DATE
This revenue procedure is effective
for allocations of housing credit dollar
amounts attributable to the National Pool
component of a qualified state’s housing
credit ceiling for calendar year 2009.
DRAFTING INFORMATION
The principal author of this revenue
procedure is Christopher J. Wilson of
the Office of Associate Chief Counsel
(Passthroughs and Special Industries). For
further information regarding this revenue
procedure contact Mr. Wilson at (202)
622–3040 (not a toll-free call).

26 CFR 601.201: Rulings and determinations letters.
(Also: Part 1, §§ 7701; 301.7701–1, 301.7701–2,
301.7701–3, 301.9100–1, 301.9100–3.)

Rev. Proc. 2009–41
SECTION 1. PURPOSE
This revenue procedure provides guidance under § 7701 of the Internal Revenue Code for an eligible entity that requests relief for a late classification election filed with the applicable IRS service
center within 3 years and 75 days of the
requested effective date of the eligible entity’s classification election. The revenue
procedure also provides guidance for those
eligible entities that do not qualify for relief under this revenue procedure and that
are required to request a letter ruling in order to request relief for a late entity classification election.
SECTION 2. BACKGROUND
.01 Section 301.7701–3(a) of the Procedure and Administration Regulations
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
as provided in § 301.7701–3. An eligible entity with at least two members can

2009–39 I.R.B.

173,876
40,609
elect to be classified as either an association (and thus as 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)
provides a default classification for an
eligible entity that does not file an entity
classification election. Thus, an entity
classification election is necessary only
when an eligible entity chooses to be classified initially as other than its default
classification or when an eligible entity
chooses to change its classification.
.02 Section 301.7701–3(c)(1)(i) provides the general rules for the time and
place for filing an entity classification
election.
Section 301.7701–3(c)(1)(i)
provides that, except as provided in paragraphs (c)(1)(iv) (limitation) or (c)(1)(v)
(deemed elections) of § 301.7701–3,
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, “Entity
Classification Election,” with the IRS service center designated on Form 8832. An
election will not be accepted unless all of
the information required by the form and
instructions, including the taxpayer identifying number of the entity, is provided on
Form 8832. See § 301.6109–1 for rules
on applying for and displaying Employer
Identification Numbers.
.03 Section 301.7701–3(c)(1)(ii) provides that an eligible entity required to file
a federal tax or information return for the
taxable year for which an election is made
must attach a copy of its Form 8832 to its
federal tax or information return for that
year. If the entity is not required to file a
return for that year, a copy of its Form 8832
must be attached to the federal income tax
or information return of any direct or indirect owner of the entity for the taxable
year of the owner that includes the date on
which the election was effective.
.04 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

439

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. If an
election specifies an effective date more
than 75 days prior to the date on which
the election is filed, it will be effective 75
days prior to the date it was filed. If an
election specifies an effective date more
than 12 months from the date on which
the election is filed, it will be effective 12
months after the date it was filed.
.05 Section 301.7701–3(d)(1) provides
in general that a foreign eligible entity’s
classification is relevant when its classification affects the liability of any person for
federal tax or information purposes.
.06 Under § 301.9100–1(c) the Commissioner may grant a reasonable extension of time to make a regulatory election
or certain statutory elections under all subtitles of the Code, except subtitles E, G, H,
and I.
.07 Section 301.9100–1(b) defines the
term “regulatory election” as 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. An entity classification
election made pursuant to § 301.7701–3(c)
is a regulatory election.
.08 The Commissioner has authority
under § 301.9100–1 and § 301.9100–3
to grant an extension of time if a taxpayer fails to file a timely election under
§ 301.7701–3(c). Section 301.9100–3
provides that the Commissioner will grant
an extension of time when the taxpayer
provides the evidence to establish to the
satisfaction of the Commissioner that the
taxpayer has acted reasonably and in good
faith and the grant of relief will not prejudice the interests of the government.
.09 Rev. Proc. 2002–59, 2002–2
C.B. 615, provides guidance under
§ 301.7701–3 for entities newly formed
under local law to request relief for a late
initial classification election filed by the
due date for the first federal tax return (excluding extensions) of the entity’s desired

September 28, 2009

classification for the year of the entity’s
formation.

dural requirements for requesting a letter
ruling are described in Rev. Proc. 2009–1,
2009–1 I.R.B. 1 (or its successor).

SECTION 3. SCOPE
.01 This revenue procedure supersedes
Rev. Proc. 2002–59 by extending late entity classification relief to both initial classification elections and changes in classification elections along with extending
the time for filing late entity classification
elections to within 3 years and 75 days of
the requested effective date of the eligible
entity’s classification. Thus, the extended
filing period no longer is limited, as it was
under Rev. Proc. 2002–59, to entities
newly formed under local law requesting
relief to file an initial classification election and to the due date for the first federal
tax return (excluding extensions) of the entity’s desired classification for the year of
the entity’s formation. For those entities
that satisfy the requirements set forth in
Section 4.01, this revenue procedure is the
exclusive means for obtaining relief for a
late entity classification election and is in
lieu of the letter ruling procedure that is
used to obtain relief for a late entity classification election under § 301.9100–1 and
§ 301.9100–3. Accordingly, user fees do
not apply to action under this revenue procedure.
.02 An eligible entity may qualify
for
alternative
relief
under
§ 301.7701–3(c)(1)(v)(C), which treats
an entity as having made a classification
election to be treated as an association
when it timely elects to be an S corporation under § 1362(a)(1). Also, see
Rev. Proc. 2004–48, 2004–2 C.B. 172,
and Rev. Proc. 2007–62, 2007–2 C.B.
786, or their successors for special rules
applicable to late S corporation elections
and late entity classification elections.
.03 An entity that does not satisfy the
requirements for relief under this revenue
procedure may request relief by applying
for a letter ruling. Additionally, eligible
entities that do not qualify for relief under this revenue procedure, because they
do not satisfy all of the requirements set
forth in Section 4.01, and that request a letter ruling for late entity classification relief
either must include as part of their letter
ruling request the affirmative representation in Section 4.04 or an explanation why
the entity cannot make the affirmative representation in Section 4.04. The proce-

September 28, 2009

SECTION 4. RELIEF FOR LATE
CLASSIFICATION ELECTIONS
.01 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 § 301.7701–3(d) solely because Form 8832 was not filed timely
under § 301.7701–3(c)(1)(iii); or
(b) the entity failed to obtain its requested change in classification (subject to
the limitations of § 301.7701–3(c)(1)(iv))
solely because Form 8832 was not filed
timely under § 301.7701–3(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 § 301.7701–3(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),

440

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 § 301.7701–3(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
§ 301.7701–3(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 § 301.7701–3(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

2009–39 I.R.B.

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 fol-

2009–39 I.R.B.

lowing 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.”
SECTION 5. EFFECTIVE DATE
.01 In general. Except as provided in
section 5.02, this revenue procedure is effective September 28, 2009, the date of
publication of this revenue procedure in
the Internal Revenue Bulletin. This revenue procedure applies to requests pending with the IRS service center pursuant
to Rev. Proc. 2002–59 on September 28,
2009, and to requests received thereafter.
It also applies to all ruling requests pending in the national office on September 28,
2009, and to requests for relief received
thereafter.
.02 Transition rule for pending letter
ruling requests. If an entity has filed a request for a letter ruling seeking relief for
a late entity classification election and that
letter ruling request is pending in the national office on September 28, 2009, the
entity may rely on this revenue procedure,
withdraw that letter ruling request and receive a refund of its user fee. However, the
national office will process letter ruling requests pending on September 28, 2009, unless, prior to the earlier of November 12,
2009, or the issuance of the letter ruling,
the entity notifies the national office that
it will rely on this revenue procedure and
withdraw its letter ruling request.
SECTION 6. EFFECT ON OTHER
DOCUMENTS
Rev. Proc. 2002–59 is superseded.

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SECTION 7. PAPERWORK
REDUCTION ACT
The collections of information contained in this revenue procedure have been
reviewed and approved by the Office of
Management and Budget (OMB) in accordance with the Paperwork Reduction Act
of 1995 (44 U.S.C. 3507(d)) under control
number 1545–1771.
The collection of information in these
regulations is in Sections 4.02 and 4.04 of
this revenue procedure. The information
will help the IRS to determine if an eligible entity meets the requirements of Section 4.01 of this revenue procedure. The
collection of information is required to obtain permission to file a late entity classification election. The information will be
reported on Form 8832 or submitted as part
of a letter ruling request. The time needed
to complete and file a letter ruling request
or a Form 8832 will vary depending on
individual circumstances. The estimated
burden for eligible entities filing a letter
ruling request or Form 8832 are included
in the estimates shown in the Paperwork
Reduction Act of the annually published
letter ruling revenue procedure and the instructions for Form 8832 respectively.
An agency may not conduct or sponsor,
and a person is not required to respond
to, a collection of information unless the
collection of information displays a valid
control number.
Books or records relating to a collection
of information must be retained as long
as their contents may become material in
the administration of any internal revenue
law. Generally, tax returns and tax return
information are confidential, as required
by 26 U.S.C. 6103.
SECTION 8. DRAFTING
INFORMATION
The principal author of this revenue procedure is Richard T. Probst of
the Office of Associate Chief Counsel
(Passthroughs & Special Industries). For
further information regarding this revenue
procedure, contact Richard T. Probst at
(202) 622–3060 (not a toll-free call).

September 28, 2009