PLR 200312010: Corporation receives relief for late S election

Plain-English summary

A corporation intended to elect S corporation status but did not file Form 2553 on time. It later filed a late election and asked the IRS for relief. The IRS found reasonable cause for the missed deadline and said the election would be treated as timely for the requested effective date if the corporation filed a completed Form 2553 with the letter within 60 days. The ruling did not decide whether the corporation otherwise met the legal requirements for S corporation status.

Ruling snapshot

• Question: Can the corporation's late S corporation election be treated as timely?
• Outcome: Approved, subject to filing within 60 days
• Key authorities: IRC § 1362(b)(5)

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury

Number: 200312010
Washington, DC 20224
Release Date: 3/21/2003
Index Number: 1362.01-03
Person to Contact:

Telephone Number:

Refer Reply To:
CC:PSI:2 - PLR-138878-02
Date:
Legend
December 12, 2002

X
=

A
=

B
=

D1 =

D2 =

Dear
:

This letter responds to a letter dated June 28, 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 A, and B are the shareholders of X. A, the president of X, represents that X was intended to be an S corporation. However, no Form 2553, Election by a Small Business Corporation, was timely filed for X. On D1, a late 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 to make a timely election to be an S corporation effective D2. Accordingly, provided that X makes an election to be an S

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PLR-138878-02

corporation by filing a completed Form 2553 effective D2, along with a copy of this letter, with the appropriate service center within 60 days from the date of this letter, then such election will be treated as timely made for D2.

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,

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

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