2553 Late Filing

[Bonnie]

Preparing a 1120S and the 2553 has not been filed. The business was started in Feb 2012 and only reason for not filing is that the taxpayer did not know he needed to file it. Do I need to mail the return and attach the 2553 with the request for relief for a late election? Is there any way to handle this and still be able to Efile the 1120S? I don't do a lot of business returns so not sure how to handle it.

[smithtax]

Bonnie,

See Relief for Late Elections on P.2 of the 2553 Instructions:

http://www.irs.gov/pub/irs-pdf/i2553.pdf

[Bonnie]

Yes, I already read this. Still was confused that's why I asked.

[smithtax]

"An entity may request relief for a late S corporation election and a late corporate classification election by filing a properly completed Form 2553 with a Form 1120S for the first tax year the entity intended to be an S corporation. A properly completed Form 2553 includes a statement explaining the reason for the failure to file the S corporation election timely and a statement explaining the reason for the failure to file the entity classification election timely. The forms must be filed together no later than six months after the due date of the tax return (excluding extensions) of the entity for the first tax year in which the S corporation election was intended. These items constitute the application requesting relief."

Explain the reasonable cause in Box H of Form 2553 and file the 2553 with the 1120S.

I would simply offer the same explanation that the taxpayer offered to you. I suspect TP probably indicated on Form SS-4 that he would be an S Corp and sincerely believed that was all he had to do, since, in his mind, the IRS had been notified.

Don't worry about attaching a statement "explaining the reason for the failure to file the entity classification election timely", because submission of Form 2553 is a 'deemed' entity election.

It happens all the time. I've never had one refused when filing the 2553 with a timely filed 1120S. Having said that, you can always appeal if necessary.

[S T]

As I am also involved in a "possible" late election or "absent the election" for a Client in 2012,

Question, does IRS send a notice when the original election is filed Form 2553?

In otherwords, the Attorney was to prepare and file the Form 2553, but he has yet to produce it - my guess is he is going to provide me a copy of the form 2553, but it was NOT Filed?

Thanks

Sandy

[DexEA]

As I am also involved in a "possible" late election or "absent the election" for a Client in 2012,

Question, does IRS send a notice when the original election is filed Form 2553?

In otherwords, the Attorney was to prepare and file the Form 2553, but he has yet to produce it - my guess is he is going to provide me a copy of the form 2553, but it was NOT Filed?

Thanks

Sandy

No answer, but I'll bump it back up because I have a related question. After filing the Form 2553 how long does it take to receive acknowledgement back from the IRS?

[smithtax]

IRS Notification of S Corp Acceptance

Normally the taxpayer will receive a form letter notification (CP261) from the IRS within 45-60 days after mailing of Form 2553.

Acceptance of late S elections (pursuant to Rev Proc 2003-43), or by filing the 2553 in conjunction with filing 1120S, can take up to 120 days.

[Gretel]

Letter

Yes, normally they send a letter. However, I had a weird case recently. Filed late election, did not follow all the documentation rules and got really concerned when my client didn't get the letter. Had him call the IRS to see if they even "received" it. They obviously did since they immediately fax the letter to him showing the date that phone call happened.