IRS grants § 1362(b)(5) relief for a late S corporation election
Plain-English summary
A limited liability company wanted to be taxed as an S corporation. It filed Form 8832 on time to be classified as an association taxable as a corporation, but missed the deadline to file Form 2553, which is the actual S corporation election. Under IRC § 1362(b)(5), the IRS can treat a late S corporation election as timely if the taxpayer shows reasonable cause for the late filing. The IRS found the company established reasonable cause and ruled it eligible for relief. If the company files a completed Form 2553 within 120 days of the letter, effective the intended date, the election is treated as timely made. The relief is contingent on the company and its shareholders filing all required returns consistent with the ruling. The IRS expressed no opinion on whether the company otherwise qualifies as an S corporation.
Ruling snapshot
- Question: Did the taxpayer show reasonable cause for a late S corporation election, qualifying for relief under § 1362(b)(5)?
- Outcome: Approved (relief granted; late election treated as timely if Form 2553 is filed within 120 days).
- Key authorities: IRC § 1362(b)(5); § 1362(a); § 1362(b)(1), (b)(3).
Full text (IRS public release)
Internal Revenue Service
Department of the Treasury
Washington, DC 20224
Number: 202627009
Release Date: 7/2/2026
Index Number: 1362.00-00, 1362.01-00, 1362.01-03
Third Party Communication: None
Date of Communication: Not Applicable
Person To Contact:
----------------------, ID No. -----------------
Telephone Number:
Refer Reply To:
CC:PTE:B03
PLR-117527-25
Date:
April 09, 2026
Legend
X = -------------------------------------------
-----------------------------------------------
Date 1 = ---------------------------
Date 2 = ----------------------
State = --------------------
Dear ----------------:
This letter responds to a letter dated July 29, 2025, and subsequent correspondence, 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 (Code).
FACTS
The information submitted states that X was formed as a limited liability company under the laws of State on Date 1. X intended to elect to be classified as an association taxable as a corporation and to elect to be treated as an S corporation for Federal tax purposes, with both elections effective Date 2. X timely filed Form 8832, Entity Classification Election, to be classified as an association taxable as a corporation, effective Date 2. However, X failed to timely file a Form 2553, Election by a Small Business Corporation, effective Date 2.
LAW AND ANALYSIS
Section 1362(a)(1) provides that, except as provided in § 1362(g), a small business corporation may elect, in accordance with § 1362, to be an S corporation.
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 current 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) the 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 the 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 the election for the taxable year or no § 1362(a) 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 the taxable year (and § 1362(b)(3) shall not apply).
CONCLUSION
Based on the facts submitted and 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. Thus, we conclude that X 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 with the appropriate service center effective Date 2, within 120 days from the date of this letter, the election shall be treated as timely made. A copy of this letter should be attached to X’s Form 2553.
Finally, this ruling is contingent on X and its shareholders filing, within 120 days from the date of this letter to the extent necessary or appropriate, all required federal income tax returns (including amended returns) consistent with the relief granted in this letter. A copy of this letter must accompany any such returns.
Except as expressly provided herein, we express or imply no opinion concerning the federal tax consequences of any aspect of any transaction or item discussed or referenced in this letter. Specifically, we express or imply no opinion concerning whether X is otherwise eligible to be an S corporation for federal tax purposes.
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.
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.
In accordance with a power of attorney on file with the office, a copy of this letter is being sent to X’s authorized representatives.
Sincerely,
Elizabeth V. Zanet
Senior Technician Reviewer, Branch 3
Office of the Associate Chief Counsel
(Partnerships, Trusts, and Estates)
Enclosure:
A copy of this letter
cc: