Tax News

CCH (cch.taxgroup.com) reports:

The IRS has provided simplified methods for obtaining relief for late corporation and S corporation classification elections. if the entity meets the qualifications provided in the procedure, these simplified methods may be used in lieu of requesting a letter ruling from the IRS.
Late S corporation elections . Relief under this procedure is available to entities filing late S corporation elections provided: the failure to qualify was due to a failure to timely file the election at the appropriate location; the entity can show reasonable cause for the failure to timely file the election; no tax return has yet been filed for the first election year; the request for relief pursuant to this procedure is requested no more than six months after the tax return due date; and no one whose tax liability would be affected by the election has reported inconsistently for the first election year.
Relief under this procedure requires the filing of Form 2553, Election by a Small Business Corporation, and Form 1120S, U.S. Income Tax Return for an S Corporation, for the first tax year the entity intended to be an S corporation. The forms must be filed no later than six months, excluding extensions, after the tax return due date.
Late S corporation election and late corporate classification election . Relief under this procedure is available provided: the entity is eligible within the meaning of Reg. §301.7701-3(a); the entity intended to be classified as a corporation as of the intended effective date of the S corporation status; the failure to qualify as a corporation was due to a failure to timely file the election and the failure to qualify as an S corporation was due to a failure to timely file the election; the entity can show reasonable cause for the failure to timely file Form 2553 and Form 1120S; no tax return has yet been filed for the first election year; the request for relief pursuant to this procedure is requested no more than six months after the tax return due date; and no one whose tax liability would be affected by the election has reported inconsistently for the first election year.
Similarly, relief under this procedure requires the filing of Form 2553 and Form 1120S for the first tax year the entity intended to be an S corporation. The forms must be filed no later than six months, excluding extensions, after the tax return due date.
Form 2553 must include a statement explaining the reason the entity failed to timely file the elections. Rev. Procs. 2003-43, 2003-1 CB 998, and 2004-48, 2004-2 CB 172, are supplemented.
Rev. Proc. 2007-62, 2007FED ¶46,657
Other References:
Code Sec. 1361
CCH Reference - 2007FED ¶32,026.40
Code Sec. 1362
CCH Reference - 2007FED ¶32,053.027
CCH Reference - 2007FED ¶32,053.054
CCH Reference - 2007FED ¶32,053.10
CCH Reference - 2007FED ¶32,053.41
CCH Reference - 2007FED ¶32,053.65
Tax Research Consultant
CCH Reference - TRC PART: 45,256
CCH Reference - TRC SCORP: 204.15