It is becoming very expensive to get a private letter ruling from the IRS. This ruling procedure is required when you wish to make a late election to treat a foreign entity as a "flow through entity." The new fees (which are also applicable to other IRS private rulings are below:
Rev. Proc. 2017-1. includes the new user fees for seeking relief under Treas. Reg. §301.9100 ("9100 relief"). A taxpayer might seek 9100 relief in order to make a late election, such as a late entity classification election (also known as a “check-the-box election”) on Form 8832.
The new IRS fees are effective for requests received after February 1, 2017. The amount of the user fee depends on the gross income of the taxpayer:
- Taxpayers with gross income of under $250,000 will have a 9% increase --- from $2,200 to $2,400
- Taxpayers with gross income greater than $250,000 and less than $1 million will have a 17% increase --- from $6,500 to $7,600
- Taxpayers with gross income greater than $250,000 and less than $1 million will have a 2% increase --- from $9,800 to $10,000
Best to make the election in a timely manner. Read the instructions to form No. 8832 which is filed to make the "check the box" election for both domestic and foreign business entities. Failure to make the election can result in some situations in adverse US tax consequences. Email us at ddnelson@gmail.com if you need assistance or wish to discuss.
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