PLR 200146049: Late S corporation election allowed after missed Form 2553

Plain-English summary

A corporation intended to be taxed as an S corporation and identified itself that way on its employer identification number application. It did not file Form 2553 by the deadline for the intended year. The IRS found reasonable cause for the missed election and ruled that it would treat the election as timely if the corporation filed a completed Form 2553 within 60 days of the letter. The IRS did not decide whether the corporation otherwise qualified as a small business corporation.

Ruling snapshot

• Question: May the corporation make its S election for the intended year after the filing deadline?
• Outcome: Approved conditionally: file Form 2553 within 60 days.
• Key authorities: IRC §§ 1361(b), 1362(b)(5).

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury

Number: 200146049
Washington, DC 20224
Release Date: 11/16/2001
Index Number: 1362.01-03
Person to Contact:

Telephone Number:

Refer Reply To:
CC:PSI:2 - PLR-130832-01
Date:
August 20, 2001

X
=

A
=

Year 1 =

Year 2 =

Dear
:

This letter responds to a letter dated March 30, 2001, and subsequent correspondence, submitted by you 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 for the Year 2 taxable year. This intent is evidenced by X’s Form SS-4, Application for Employer Identification Number, which indicates X’s type of entity as “Sub S.” However, no Form 2553, Election by a Small Business Corporation, was timely filed for X for its Year 2 taxable year.

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 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

-2-
PLR-130832-01

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,
MATTHEW LAY
Senior Technician Reviewer, Branch 2
Office of the Associate Chief Counsel
(Passthroughs and Special Industries)

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