PLR 200002023: S election accepted after service center found no record of filing

Plain-English summary

A corporation's sole shareholder said he timely filed an S corporation election prepared by the company's accountant. The IRS service center had no record of receiving the form. Based on the representations submitted, the IRS found reasonable cause and agreed to treat an election for the corporation's first taxable year as timely if it filed a completed Form 2553 within 60 days of the letter. The IRS did not determine whether the company otherwise qualified as a small business corporation.

Ruling snapshot

• Question: Can the company's S election be treated as timely when the service center has no filing record?
• Outcome: Approved, subject to filing Form 2553 within 60 days.
• Key authorities: IRC § 1362(b)(5).

Full text (IRS public release)

Internal Revenue Service Department of the Treasury

Index Number: 1362.01-03 Washington, DC 20224

Number: 200002023
Person to Contact:
Release Date: 1/14/2000
Telephone Number:

Refer Reply To:
CC:DOM:P&SI:2 - PLR-112784-99
Date:
October 13, 1999
X =

A =

D1 =

D2 =

Year 1 =

Dear
:

This letter responds to your letter dated July 2, 1999, and subsequent correspondence, requesting a ruling under § 1362(b)(5) of the Internal Revenue Code.

The information submitted states that X was incorporated on D1 of Year 1. A, X’s president and sole shareholder, represents that X was intended to be an S corporation effective from the date of incorporation. A further represents that X’s accountant prepared a Form 2553, Election by a Small Business Corporation, for X, which A timely filed on D2 of Year 1. However, X’s Internal Revenue service center has no record of receiving a Form 2553 for X.
Section 1362(b)(5) of the Code provides that if -- (A) an election under § 1362(a) is made for any taxable year after the date prescribed by § 1362(b) for making such election for such taxable year or no such election is made for any taxable year, and (B) the Secretary determines that there was reasonable cause for the failure to timely make such election, the Secretary may treat such an election as timely made for such taxable year.

Based solely on the facts and the representations submitted, we conclude that X has established reasonable cause for failing to make a timely election to be an S corporation for X’s first taxable year. Accordingly, provided that X makes an election to be an S corporation by filing a completed Form 2553 with the -2-

appropriate service center effective for its Year 1 taxable year, within 60 days following the date of this letter, then such election will be treated as timely made for X’s Year 1 taxable year. A copy of this letter should be attached to the Form 2553.

Except as specifically set forth above, no opinion is expressed concerning the federal tax consequences of the facts described above under any other provision of the Code, including whether X was or is a small business corporation under § 1361(b) of the Code.

This ruling is directed only to the taxpayer who requested it. Section 6110(k)(3) of the Code provides that it may not be used or cited as precedent.
Sincerely yours,

H. GRACE KIM
Assistant to the Chief
Branch 2
Office of the Assistant
Chief Counsel
(Passthroughs and
Special Industries)

Enclosures: 2
Copy of this letter
Copy for § 6110 purposes