PLR 200116039: Late S corporation election treated as timely if filed within 60 days

Plain-English summary

A corporation intended to elect S corporation status and said its preparer had filed the election, but the IRS service center had no record of receiving it. The IRS found reasonable cause for the failure to make a timely election. It agreed to treat an election for the intended tax year as timely if the corporation filed a completed Form 2553 within 60 days of the letter and attached a copy of the ruling. The IRS did not decide whether the corporation otherwise qualified as a small business corporation.

Ruling snapshot

• Question: Could the corporation's missing S election be treated as timely?
• Outcome: Approved, conditioned on filing Form 2553 within 60 days.
• Key authorities: IRC §§ 1361(b), 1362(a), 1362(b)(5).

Full text (IRS public release)

Internal Revenue Service Department of the Treasury

Number: 200116039
Washington, DC 20224
Release Date: 4/20/2001
Index Number: 1362.01-03
Person to Contact:

Telephone Number:

Refer Reply To:
CC:PSI:2 - PLR-118225-00
Date:
January 22, 2001
X =

A =

Year 1 =

Year 2 =

Dear :

This letter responds to a letter dated August 5, 2000, and subsequent correspondence, submitted by you as X’s authorized representative on behalf of X, requesting a ruling under § 1362(b)(5) of the Internal Revenue Code.

The information submitted states that X was incorporated in Year 1. A, the president of X, represents that X was intended to be an S corporation effective for the Year 2 taxable year. This intent is evidenced by X’s Form SS-4, Application for Employer Identification Number, which indicates that X would be an "Sub S" corporation. A further represents that X’s return preparer prepared and filed a Form 2553, Election by a Small Business Corporation, for X. However, X’s Internal Revenue service center has no record of receiving a Form 2553 for X. Therefore, no Form 2553 was filed 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

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to make a timely election to be an S corporation for X’s Year 2 taxable year. Accordingly, provided that X makes an election to be an S corporation by filing a completed Form 2553 with the appropriate service center effective for its Year 2 taxable year , within 60 days following the date of this letter, then such election will be treated as timely made for X’s Year 2 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.
Pursuant to a power of attorney on file with this office, a copy of this letter is being forwarded to X.
Sincerely yours,
JEANNE M. SULLIVAN
Assistant to the Chief
Branch 2
Office of the Associate Chief Counsel
(Passthroughs and Special Industries)

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