Late S-Election

[Gretel]

Your opinion please.

Client started biz last year as corp., didn't pay attention to 2553 after it was a little too late. Filed form, hasn't heard back yet, wants to file tax return.

IRS probably won't grant S-Corp. automatically but if we file S-Corp return and attach another 2553 with required language for automatic approval, will it be certain that IRS grants it?

I am concerned that the first filing of form 2553 has messed up everything.

[TaxLadyinPA]

Rev Proc 2004-48

I had client come to me in March 2007 to file his s-corp return. Alas as usual I read the IRS letter telling him to file an 1120.

Form 2553 was never filed when he opened his business in March 2006.
We filed the Form 2553 in March-07 requesting the S-corp status retro back to March-06 pursuant to Rev Proc. 2004-48. We also filed for an extension on his c-corp tax filing.

It took two months to get an answer from the IRS for the approval of the s-corp status retro back to March-06

He might get a denial from them because the time expired for him to make the election. He should have come to you before he sent the for 2553 in. You would have been able to file it pursuant to the Rev Proc along with a letter from you explaining that they qualified for the s-corp status in every other respect except for the timely filing of form 2553 and they probably would have approved it.

Now you can only sit and wait. If I were you I would file an extension for now until you hear from the IRS.

Good luck .....

[Gretel]

Thanks for the response. I will wait and see. Actually, I was the one who messed up. So far I was never involved in making the 2553 election and I misinterpreted the date, it was just a few days past the due date.