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S Corporation Elections

IRS simplifies late filing relief.

January 2008
by Alistair Nevius/The Tax Adviser

In Rev. Proc. 2007-62 (released Oct. 9, 2007), the IRS has provided a new simplified method for taxpayers to request relief for late S corporation elections.

A small business corporation may elect to become an S corporation at any time during the preceding tax year or at any time on or before the 15th day of the third month of the current tax year. The election is made on Form 2553, Election by a Small Business Corporation.

A late election is treated as having been made for the following tax year. However, the Service can treat the election as timely if it finds reasonable cause for the failure to meet the deadline. Rev. Proc. 97-48 provides procedures for obtaining automatic relief of certain late S corporation elections, and Rev. Proc. 2003-43 provides certain simplified procedures if the corporation’s Form 2553 was not timely filed with the proper service center.

Read the full article here.