IRS Releases Consolidated Procedures for Late S-Elections

The IRS just released Revenue Procedure 2013-30 to consolidate a number of previous procedures related to late elections for S-Corp status (as well as ESBT, QST, and QSub elections).  The procedure is effective September 3, 2013, and you can get a copy of the revenue procedure from the IRS website.

Rev. Proc. 2013-30 provides the exclusive simplified method for taxpayers to request relief for late elections.  It expands and consolidates relief provisions included in prior revenue procedures that provide a simplified method for taxpayers to request relief for late S corporation elections.  It provides procedures for situations within its scope that are in lieu of the letter ruling process ordinarily used to obtain relief for a late election.  An entity that does not meet the requirements for relief or is denied relief under this new revenue procedure may seek relief by requesting a letter ruling.

General Requirements for Relief

  1. The requesting entity intended to be classified as an S corporation;
  2. The requesting entity requests relief under the procedure within 3 years and 75 days after the effective date;
  3. The failure to qualify as of the effective date was solely because the election was not timely filed by the due date; and
  4. The requesting entity has reasonable cause for its failure to make the timely election and has acted diligently to correct the mistake upon its discovery.

Specific Requirements for Relief for Late S Corporation Elections

  1. A requesting entity seeking relief must file Form 2553 signed by (1) an officer of the corporation authorized to sign; and (2) all persons who were shareholders at any time during the period that began on the first day of the taxable year for which the election is to be effective and ends on the day the completed election form is filed;
  2. The election form must includes statements from all shareholders that they have reported their income on all affected returns consistent with the S Corp election for the year the election should have been filed and for all subsequent years;
  3. The completed election form must also include the following representations: (1) the requesting entity is an eligible entity; (2) the requesting entity intended to be classified as a corporation as of the effective date of the S corporation status; (3) the requesting entity fails to qualify as a corporation solely because Form 8832 was not timely filed; (4) the requesting entity fails to qualify as an S corporation solely because the S Corporation election was not timely filed; and (5) the requesting entity timely filed all required federal returns and information returns consistent with its requested classification for all of the years the entity intended to be an S Corp;
  4. The 3 year and 75 day limitation is not applicable if certain additional requirements are met.

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D. Bryan Willis

D. Bryan Willis

Bryan Willis is a Tyler lawyer providing legal services across Texas in the areas of business law, litigation, probate, and estate planning.
D. Bryan Willis

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