120 days granted to a corporation to make a late S corporation election for reasonable cause

Plain-English summary

A corporation that wants to be taxed as an S corporation (income passing
through to shareholders rather than being taxed at the corporate level) must
file Form 2553 by a deadline tied to the start of the tax year. Here, a
newly incorporated company intended to be an S corporation from a specific
date but never filed Form 2553 on time. It asked the IRS for relief under
§ 1362(b)(5), which lets the IRS treat a late S election as timely if the
company shows reasonable cause for missing the deadline. The IRS found
reasonable cause and gave the company 120 days from the date of the letter
to file the late Form 2553 effective the intended date. The relief is
conditioned on the company and its shareholders filing all required returns
for open years consistent with S status. The IRS gave no opinion on whether
the company is otherwise eligible to be an S corporation or on any penalties.

Ruling snapshot

• Question: May a corporation that missed the Form 2553 deadline get
  relief to make a late S corporation election?
• Outcome: Approved (reasonable cause found; 120 days to file Form 2553)
• Key authorities: IRC § 1362(a), (b)(1), (b)(3), and (b)(5)

Full text (IRS public release)

 Internal Revenue Service                                   Department of the Treasury
                                                            Washington, DC 20224

 Number: 202614007                                          Third Party Communication: None
 Release Date: 4/3/2026                                     Date of Communication: Not Applicable
 Index Number: 1362.00-00, 1362.01-03
                                                            Person To Contact:
 --------------------------------------------               ----------------------------, ID No. --------------
 --------------------------------------                     -----------------
 -----------------------------------------                  Telephone Number:
                                                            ---------------------
                                                            Refer Reply To:
                                                            CC:PTE:B03
                                                            PLR-111321-25
                                                            Date:
                                                            January 09, 2026




Legend

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

 State         = -------------
 Date 1        = --------------------------
 Date 2        = ----------------------


Dear ----------------------,

        This letter responds to a letter dated November 4, 2024, and subsequent
correspondence submitted on behalf of X by its authorized representative, requesting
that the Service grant to X relief to file a late S corporation election under § 1362(b)(5)
of the Internal Revenue Code (Code).

                                                  FACTS

       According to the information submitted, X was incorporated on Date 1 under the
laws of State. X intended to elect to be treated as an S corporation for federal tax
purposes effective Date 2. However, X failed to file Form 2553, Election by a Small
Business Corporation, effective Date 2.

                                           LAW AND ANALYSIS

      Section 1362(a) provides that a small business corporation may elect to be an S
corporation.
PLR-111321-25                                 2

        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 day of
the third month of the taxable year.

       Section 1362(b)(3) provides that if (A) a small business corporation makes an
election under § 1362(a) for any taxable year, and (B) 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 is treated as made for the
following taxable year.

        Section 1362(b)(5) provides that if (A) an election under § 1362(a) is made for
any taxable year (determined without regard to § 1362(b)(3)) 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 (and § 1362(b)(3) shall not apply).

                                      CONCLUSION

       Based solely on the facts 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 2 and is eligible for relief under § 1362(b)(5). Accordingly, if X
makes an election to be an S corporation by filing a completed Form 2553 effective
Date 2, with the appropriate service center within 120 days from the date of this letter,
then such election shall be treated as timely made. A copy of this letter must
accompany Form 2553.

        This ruling is contingent on X and its shareholders filing within 120 days from the
date of this letter all required returns for all open years consistent with the requested
relief. A copy of this letter much accompany any such returns.

        We express no opinion concerning the assessment of any interest, additions to
tax, additional amounts, or penalties for failure to file a timely tax or information return
with respect to any taxable year that may be affected by this ruling. For example, we
express no opinion as to whether this taxpayer is entitled to any relief from any penalty
on the basis that this taxpayer had reasonable cause for failure to file timely any income
tax or information returns.

       Except as expressly provided herein, we express or imply no opinion concerning
the federal tax consequences of the facts of this case under any other provision of the
Code. Specifically, we express or imply no opinion regarding X's eligibility to be an S
corporation.
PLR-111321-25                                             3

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

      This ruling is directed only to the taxpayer requesting them. Section 6110(k)(3) of
the Code provides that it may not be used or cited as precedent.

      In accordance with a power of attorney on file with this office, we are sending a
copy of this letter to X’s authorized representative.

                                             Sincerely,




                                             Elizabeth V. Zanet
                                             Senior Technician Reviewer, Branch 3
                                             Office of the Associate Chief Counsel
                                             (Passthroughs, Trusts and Estates)

Enclosure
      Copy of this letter for Section 6110 purposes

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