PLR 1311005: IRS grants relief for a late S corporation election

Plain-English summary

The IRS granted a corporation relief after its Form 2553, Election by a Small Business Corporation, was not received by the IRS. The corporation intended to elect S corporation status effective on a specified date and requested relief under IRC § 1362(b)(5). The IRS ruled that the corporation would be treated as an S corporation from that date, provided it otherwise qualified, and required it to submit a properly completed Form 2553 within 120 days with a copy of the ruling attached. The ruling did not express an opinion on the corporation's other eligibility requirements.

Ruling snapshot

• Question: Can the corporation receive relief for a missing Form 2553 and be treated as an S corporation from the intended effective date?
• Outcome: Approved, subject to the corporation otherwise qualifying and submitting Form 2553 within 120 days.
• Key authorities: IRC §§ 1361(a)(1), 1362(a), 1362(b), and 1362(b)(5); IRC § 6110(k)(3)

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201311005 Third Party Communication: None
Release Date: 3/15/2013 Date of Communication: Not Applicable
Index Number: 1362.00-00
Person To Contact:
---------------------------------------- --------------------, ID No. ------------------
-------------------------------------- Telephone Number:
----------------------------- Refer Reply To:
CC:PSI:B02
PLR-130333-12
Date:
November 21, 2012

X: -----------------------------------------
-------------------------

Date 1: --------------------

Date 2: -------------------

State: --------------

Dear --------------------:

  This letter responds to your letter dated June 18, 2012, and subsequent

correspondence, requesting relief under § 1362(b)(5) of the Internal Revenue Code.

    The information submitted states that X was formed in State on Date 1. It was

intended for X to be an S corporation effective Date 2. X represents that the Form
2553, Election by a Small Business Corporation, was prepared and timely filed for X
effective Date 2. However, its Form 2553 was not received by the Internal Revenue
Service. Accordingly, X requests a ruling that it will be treated as an S corporation
effective Date 2.

    Section 1361(a)(1) provides that the term “S corporation” means, with respect to

any taxable year, a “small business corporation” for which an election under § 1362(a)
is in effect for such year.

  Section 1362(a) provides that a small business corporation may elect to be an S

Corporation.
PLR-130333-12 2

    Section 1362(b) provides the rule on when an S election will be effective. Section

1362(b)(2) provides in relevant part that if an S election is made within the first two and
one-half months of a corporation's taxable year, then the corporation will be treated as
an S Corporation for the year in which the election is made. Under § 1362(b)(3),
however, if an S election is made after the first two and one-half months of a
corporation's taxable year, then that corporation will not be treated as an S corporation
until the taxable year after the year in which the S election is filed.

   Section 1362(b)(5) provides that if: (1) no § 1362(a) election is made for any

taxable year, and (2) the Secretary determines that there was reasonable cause for the
failure to timely make such election, then the Secretary may treat such an election as
timely made for such taxable year and § 1362(b)(3) shall not apply.

   Based solely on the facts submitted and the representations made, and provided

that X otherwise qualifies as an S corporation, we conclude that X will be treated as an
S corporation effective Date 2. Within 120 days from the date of this letter, X should
submit a properly completed Form 2553 effective Date 2, with a copy of this letter
attached, to the appropriate service center.

   Except as specifically set forth above, no opinion is expressed or implied

concerning the federal tax consequences of the above-described facts under any other
provision of the Code. In particular, no opinion is expressed or implied concerning
whether X is otherwise eligible to be an S corporation for federal tax purposes.

  This ruling is directed only to the taxpayer that requested it. Section 6110(k)(3) of

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 sent to your authorized representatives.

                                           Sincerely,


                                           Charlotte Chyr
                                           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