Press Room: Tax Release

September 13, 2013

IRS Issues Guidance on Relief for Making Late S Corporation Elections

In Rev. Proc. 2013-30, IRS issued new guidance granting relief for a number of late S corporation-related elections. These include making the S corporation election; small business trust elections; qualified subchapter S trust elections; qualified subchapter S subsidiary elections; and corporate classification elections that the taxpayer intended to take effect on the same date as S corporation election for the entity. These new procedures expand the time period for relief (up to 3 years and 75 days) and, in many instances, eliminate the need to request a private letter ruling and pay a user fee.

The primary requirement for obtaining relief is a statement signed under penalties of perjury by the corporation declaring that it has reasonable cause for its failure to make a timely election and acted diligently to correct the mistake upon its discovery. In addition, all shareholders must provide a statement signed under penalties of perjury that they have reported all income from the corporation from the intended effective date of the election through the date the completed election statement is filed. All required statements must be attached to the late election. Any delinquent returns for the corporation must be filed and the late election must be attached to either the delinquent return for the first effective year or filed directly with the applicable IRS service center. 

Upon receipt of the completed request for relief, IRS will determine whether the requirements for granting additional time have been satisfied. This guidance streamlines and simplifies the requirements for relief for late filings.