IRS grants a corporation reasonable-cause relief to file a late S corporation election

Plain-English summary

A small business corporation must file Form 2553 on time to be taxed as an S
corporation. Here the company intended to be an S corporation as of a specific
date but inadvertently failed to file the election on time. It asked the IRS for
relief under Section 1362(b)(5), which lets the IRS treat a late S election as
timely if the corporation had reasonable cause for missing the deadline. The IRS
concluded the company established reasonable cause and granted relief, provided it
files a completed Form 2553 within 120 days of the letter. The relief is
contingent on the corporation and its owners filing all required returns
consistent with S status. The IRS expressed no opinion on whether the company is
otherwise eligible to be an S corporation.

Ruling snapshot

• Question: Should a corporation get relief to file a late S corporation election?
• Outcome: Approved. Relief was granted; the late election is treated as timely if Form 2553 is filed within 120 days.
• Key authorities: IRC § 1362(b)(5); IRC § 1361(a)(1)

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224

Number: 202551020
Release Date: 12/19/2025
Index Number: 1362.00-00, 1362.01-03

Third Party Communication: None
Date of Communication: Not Applicable

Person To Contact:
----------------------------, ID No. --------------
Telephone Number:

Refer Reply To:
CC:PTE:01
PLR-114871-25
Date:
September 22, 2025

LEGEND

X = --------------------------
------- ----------------

State = -------------

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

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

   This letter responds to a letter dated July 2, 2025, submitted on behalf of X by its

authorized representatives, requesting relief to file a late S corporation election under
§ 1362(b)(5) of the Internal Revenue Code.

                                                   FACTS

  The information submitted states that X was incorporated under the laws of State

on Date. X intended to elect S corporation treatment effective Date; however, X
inadvertently failed to timely file Form 2553, Election by a Small Business Corporation.

                                       LAW AND ANALYSIS

   Section 1362(a) of the Code provides that, except as provided in § 1362(g), a

small business corporation may elect, in accordance with the provisions of § 1362, to be
an S corporation.

  Section 1361(a)(1) defines an “S corporation” as a small business corporation for

which an election under § 1362(a) is in effect for the taxable year.

   Section 1362(b)(1) provides that an election under § 1362(a) may be made by a

small business corporation for any taxable year (A) at any time during the preceding
taxable year, or (B) at any time during the taxable year and on or before the 15th of the
third month of the taxable year.

   Section 1362(b)(3) provides that if a small business corporation makes an

election under § 1362(a) for any taxable year, and such election is made after the 15th
day of the third month of the taxable year and on or before the 15th day of the third
month of the following taxable year, then such election will be treated as made for the
following year.

   Section 1362(b)(5) 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.

                                  CONCLUSION

    Based solely on the information submitted and the representations made, we

conclude that X has established reasonable cause for failing to make a timely election
to be an S corporation effective Date and is eligible for relief under § 1362(b)(5).
Accordingly, provided that X makes an election to be an S corporation by filing a
completed Form 2553 effective Date with the appropriate service center within 120 days
from the date of this letter, then such election will be treated as timely made. A copy of
this letter should be attached to the Form 2553.

    This ruling is contingent on X and its owners filing, within 120 days of the date of

this letter, to the extent necessary or appropriate, all required federal income tax returns
and information returns (including amended returns) consistent with the requested relief
granted herein. A copy of this letter should be attached to any such returns.

   Except as expressly provided herein, we express or imply no opinion concerning

the federal tax consequences of the facts described above under any other provision of
the Code. Specifically, we express or imply no opinion regarding X’s eligibility to be an
S corporation.

  This ruling is directed only to the taxpayer that requested it. According to

§ 6110(k)(3), this ruling may not be used or cited as precedent.

   The ruling contained in this letter is 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 ruling request, it is subject to verification on examination.

    Pursuant to a power of attorney on file with this office, we are sending a copy of

this letter to your authorized representatives.

                                              Sincerely,

                                              _______/S/___________             _
                                              Jennifer N. Keeney
                                              Senior Counsel, Branch 1
                                              Office of the Associate Chief Counsel
                                              (Passthroughs, Trusts, and Estates)

Enclosure
Copy of this letter for § 6110 purposes

cc: ---------------------
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