PLRs and Interest of Government not Prejudiced

PLRs and Interest of Government not Prejudiced

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Not Prejudicing the Interests of the Government under Treas. Reg. § 301.9100-3 Regarding a late-filed IC-DISC Election (Form 4876-A)

Business professionals reviewing financial documents related to late-filed IC-DISC Election and government interests.

In the context of Treas. Reg. § 301.9100-3, when the IRS considers granting an extension of time to make a regulatory election (such as filing Form 4876-A to elect IC-DISC status), a key requirement is that the taxpayer must demonstrate that granting the extension will not prejudice the interests of the Government.

The phrase “not prejudice the interests of the Government” means:

  • The extension should not cause harm or disadvantage to the Government’s ability to collect the correct amount of tax or enforce compliance.
  • The Government’s interests include ensuring that tax laws are administered fairly and efficiently.
  • Granting relief should not result in the loss of government revenue or impede the IRS’s enforcement efforts.
  • The taxpayer must show that providing an extension will not unfairly benefit them relative to others who timely complied with the filing requirements.

In this Private Letter Ruling (PLR 201421010), the IRS found that the taxpayer acted reasonably and in good faith and that granting the 60-day extension to file Form 4876-A would not prejudice the Government’s interests. This suggests the IRS determined:

  • The taxpayer’s failure to timely file was due to a miscommunication and not an attempt to evade or delay tax obligations.
  • The late filing would not adversely affect the Government’s ability to assess or collect the appropriate taxes.
  • There was no evidence that the Government would suffer any harm or loss of revenue as a result of granting this relief.

Thus, as per Treas. Reg. § 301.9100-3(a), to be granted this relief, the taxpayer had to provide sufficient evidence, including affidavits and representations, showing their reasonable cause, good faith, and that the granting of relief would not harm the Government’s interest in tax administration.

Author

  • Paul Ferreira, CPA, is the President and founder of Export Tax Management (ETM), which he established in 2008 after over ten years of experience in international tax. Recognizing a need for specialized expertise in the Interest Charge-Domestic International Sales Corporation (IC-DISC), Paul focused ETM’s services on helping businesses maximize their tax savings through this unique export incentive. With over 25 years of experience, Paul leads a team of skilled CPAs based in Boston, MA, providing expert IC-DISC advisory to companies across the U.S.

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