PLR 200310006: Corporation receives relief for late S corporation election

Plain-English summary

A corporation intended to elect S corporation status and filed an S corporation return, but the IRS service center had no record of a timely Form 2553 election. The corporation requested relief under section 1362(b)(5). The IRS found reasonable cause for the late or missing election and ruled that the corporation would be treated as an S corporation from the requested tax year, provided it filed a completed Form 2553 within 60 days. The ruling did not decide whether the corporation otherwise qualified as a small business corporation.

Ruling snapshot

• Question: May the corporation's late S corporation election be treated as timely made?
• Outcome: Approved; the corporation received 60 days to file Form 2553 effective for the requested year
• Key authorities: IRC §§ 1362(b)(5), 1361(b)

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury

Number: 200310006
Washington, DC 20224
Release Date: 3/7/2003
Index Number: 1362.01-03
Person to Contact:

Telephone Number:

Refer Reply To:
CC:PSI:2 - PLR-140049-02
Date:
November 22, 2002
Legend

X
=

A
=

D1 =

Year 1 =

Dear
:

This letter responds to a letter dated January 31, 2002, and subsequent correspondence, submitted on behalf of X, requesting a ruling under § 1362(b)(5) of the Internal Revenue Code.

The information submitted states that X was incorporated on D1. A, the president of X, represents that X was intended to be an S corporation, as evidenced by X’s filing of Form 1120S, U.S. Income Tax Return for an S Corporation, for the Year 1 taxable year. However, X’s Internal Revenue service center has no record of a Form 2553, Election by a Small Business Corporation, being timely 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, and provided that X otherwise qualifies as an S corporation, we conclude that X will be treated as an S corporation effective for Year 1. Accordingly, provided that X makes an election to be -2-
PLR-140049-02

an S corporation by filing a completed Form 2553 with the appropriate service center effective for Year 1 within 60 days following the date of this letter, then such election will be treated as timely made for X effective for Year 1. 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’s authorized representative.

Sincerely yours,

CAROLYN HINCHMAN GRAY
Senior Counsel, Branch 2
Office of the Associate Chief Counsel
(Passthroughs and Special Industries)

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