IRS Simplifies Late S Corp Elections

The Internal Revenue Service has combined parts of several revenue procedures into a new revenue procedure that provides relief to companies that make late elections to become S corporations.

Revenue Procedure 2013-30 facilitates the granting of relief to taxpayers who request relief previously provided in numerous other revenue procedures by consolidating provisions from them into a single revenue procedure and extending relief under certain circumstances.

The revenue procedure provides the exclusive simplified methods for taxpayers to request relief for late S corporation elections, Electing Small Business Trust elections, Qualified Subchapter S Trust elections, Qualified Subchapter S Subsidiary elections and late corporate classification elections that the taxpayer intended to take effect on the same date that the taxpayer intended that an S corporation election for the entity should take effect. The revenue procedure provides relief if the taxpayer satisfies certain requirements.

Accompanying the document is a flowchart designed to help taxpayers apply the revenue procedure. It generally extends the time to ask for a late S corp election until three years and 75 days after the election was planned to take effect. For a simple request under the right conditions, there is no deadline. If taxpayers do not qualify for the simplified relief, they can instead ask for a letter ruling from the IRS.

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