In August 2013, the IRS issued Rev. Proc. 2013-30 that consolidates and simplifies rules provided previously. Taxpayers now have 3 years and 75 days from the date the S-election was originally intended to be effective to file a late S-election. No use user fee will apply. The election will be effective as of that intended date. To qualify for relief, the corporation must meet the following:
- The S-election would have been effective had the Form 2553 been submitted timely.
- The failure to qualify as an S-corporation was solely because the election was not submitted timely.
- The corporation has reasonable cause for its failure to file timely and acted diligently to correct the error.
The entity must properly complete the Form 2553 with “FILED PURSUANT TO REV. PROC. 2013-30” written at the top of the form. Link to IRS form 2553 http://www.irs.gov/pub/irs-pdf/f2553.pdf. Form 2553 must include a “Statement of Reasonable Cause,” and file under one of the following parameters:
- Attaching Form 2553 to the current Form 1120S, as long as the return is filed within 3 years and 75 days of the intended effective date without considering extensions AND all prior returns between the intended effective date and the current were filed as an 1120S. You must write on the top of the 1120S “INCLUDES LATE ELECTION(S) FILED PURSUANT TO REV. PROC. 2013-30.”
- Attaching Form 2553 to one of the S-corporation’s late filed prior years Form 1120S. All delinquent S-corp returns must be filed simultaneously and consistently with the requested relief. You must write on the top of each 1120S “INCLUDES LATE ELECTION(S) FILED PURSUANT TO REV. PROC. 2013-30.”
Filing the Form 2553 independently of the Form 1120S. The Form 2553 can be mailed to the Applicable Service Center as indicated by the mailing address of the entity’s Form 1120S.
If you have any questions, please contact Ken McLaughlin at 630-230-8434.
Source: Bob Kovanic, MBA, CPA, Padgett Business Services
NOTE: This publication should not be regarded as legal advice or legal opinion. The content is intended for general informational purposes only. If you have any concerns regarding anything in this publication you may contact your own attorney, CPA, or our law office at 630-230-8434, website www.ma-lawpc.com.