PLR 1340002: IRS grants late S corporation election relief

Plain-English summary

The IRS agreed to treat a corporation as an S corporation beginning on the requested effective date even though it had no record of receiving Form 2553. The corporation's sole shareholder intended to make the election, and the IRS found reasonable cause for the late or missing filing. The corporation was required to submit a properly completed Form 2553 to the appropriate service center within 120 days and attach a copy of the ruling. The ruling did not determine whether the corporation otherwise qualified as an S corporation.

Ruling snapshot

• Question: Could the corporation receive relief for a late or missing S corporation election under IRC § 1362(b)(5)?
• Outcome: Approved, S corporation treatment granted
• Key authorities: IRC §§ 1362(a), 1362(b), 1362(b)(5), and 6110(k)(3)

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201340002 Third Party Communication: None
Release Date: 10/4/2013 Date of Communication: Not Applicable
Index Number: 1362.00-00, 1362.01-03
Person To Contact:
----------------------------------- -----------------------, ID No. -------------------
------------------ ---------------------------------------------------
------------------------------------- Telephone Number:
------------------------------ ----------------------
-- Refer Reply To:
-- CC:PSI:02
PLR-103674-13
Date:
June 18, 2013

                                                 LEGEND

                 ------------------

X =
----------------------------
----------------------------
A =
------------------------------

Date = -----------------

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

   This letter responds to a letter dated August 15, 2012 submitted on behalf of X by

X’s authorized representative and requesting relief under § 1362(b)(5) of the Internal
Revenue Code.

    The information submitted states that A formed X on Date. A, the sole

shareholder of X, intended for X to be an S corporation for federal tax purposes
effective Date; however, the Service has no record of receiving Form 2553, Election by
a Small Business Corporation, for X.

   Section 1362(a)(1) provides that a small business corporation may elect to be an

S corporation. Section 1362(b)(1) provides that an S election will be effective for the
taxable year if a small business corporation makes the election during the preceding
taxable year or within the first two and one-half months of the corporation’s taxable
year. Section 1362(b)(3) provides that an S election made after the first two and one-
half months of the corporation’s taxable year will be treated as made for the following
taxable year.
PLR-103674-13 2

    Section 1362(b)(5) authorizes the Secretary to treat an election as timely made 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 the election.

    Based solely on the facts submitted and the representations made, we conclude

that X will be treated as an S corporation effective Date provided that X submits a
properly completed Form 2553 to the appropriate service center within 120 days of the
date of this letter. A copy of this letter should be attached to Form 2553 and is enclosed
for that purpose.

    Except as expressly provided herein, no opinion is expressed or implied

concerning the tax consequences of any aspect of any transaction or item discussed or
referenced in this letter. Specifically, we express no opinion as to whether X otherwise
qualifies as an S corporation.

  The rulings contained in this letter are based upon information and

representations submitted by the taxpayer and accompanied by a penalty of perjury
statement executed by an appropriate party. While this office has not verified any of
the material submitted in support of the request for rulings, it is subject to verification on
examination.

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

the Code provides that it may not be used or cited as precedent.

     In accordance with the Power of Attorney on file with this office, a copy of this

letter is being sent to your authorized representative.

                                    Sincerely,



                                    Melissa C. Liquerman
                                    Branch Chief, Branch 2
                                    (Passthroughs & Special Industries)

Enclosures (2)
Copy of this letter
Copy for § 6110 purposes

cc: