IRS Curtails Late S Corp Election

S Corporation

The Internal Revenue Service has recently consolidated the procedure for requesting relief for businesses that make late elections to become S corporations. The new streamlined relief comes in the form of Revenue Procedure 2013-30 which was drafted by David Kirk and published earlier this month. This new procedure combines the provisions of several existing revenue procedures and, in some cases, extends the time period under which relief for late S corporation elections can be granted.

Procedure 2013-30 offers shortened approaches for taxpayers who request relief for late S Corporation elections, Small Business Trust elections, Qualified Subchapter S Trust elections, Qualified Subchapter S Subsidiary elections and late corporate classification elections. The new procedure offers reprieve if the taxpayer meets certain specific criteria and applies to any of the aforementioned elections that the taxpayer anticipated would take effect on the same date that the taxpayer intended that an S corporation election for the entity should take effect.

Accompanying the document is a flowchart intended to assist taxpayers in applying the new procedure. It commonly extends the time period for requesting a late S Corp election to three years and 75 days after the election was intended to take effect. However, for a simple appeal under the right circumstances, there is no deadline for making the request. If taxpayers do not qualify for the streamlined relief provided by Procedure 2013-30, they can instead apply for a Private Letter Ruling from the IRS.

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