IRS grants late S corporation election relief after missed Form 2553 deadline
PLR 202551020. §1362(b)(5)
The IRS allowed a corporation to retroactively elect S corporation status after it missed the original filing deadline, because the failure was due to reasonable cause and not intent.
Overview of Relief
The Internal Revenue Service granted relief to a newly formed corporation that failed to timely file Form 2553 to elect S corporation status. The IRS treated the late election as timely under §1362(b)(5).
Key Facts
The taxpayer was incorporated under state law on the formation date.
The corporation intended to be taxed as an S corporation starting on that same date.
Form 2553 was not filed by the statutory deadline.
The failure was inadvertent.
The taxpayer requested late-election relief through a private letter ruling.
Statutory Framework
§1362(a) allows a qualifying small business corporation to elect S corporation status.
§1362(b)(1) requires the election to be filed by the 15th day of the third month of the taxable year.
§1362(b)(3) shifts a late-filed election to the following year if filed w…
