Late S corporation election treated as timely

Plain-English summary

A corporation was eligible to elect S corporation treatment from the date it was incorporated but inadvertently failed to file Form 2553 on time. It nevertheless filed its returns consistently with S corporation treatment. The IRS found reasonable cause for the late election and treated it as timely for the intended first taxable year, conditioned on the corporation filing Form 2553 with the appropriate service center within 120 days.

Ruling snapshot

• Question: Could a corporation's late S election be treated as timely when it had reasonable cause and consistently filed as an S corporation?
• Outcome: Approved
• Key authorities: IRC §§ 1361(a), 1362(a), and 1362(b)(1), (3), and (5)

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 202527004 Third Party Communication: None
Release Date: 7/3/2025 Date of Communication: Not Applicable
Index Number: 1362.00-00, 1362.01-03
Person To Contact:
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Refer Reply To:
CC:PT&E:B01
PLR-105306-25
Date:
April 07, 2025

                                             LEGEND

X = -------------------------------------
State = -----------------
Date = ----------------------

Dear ------------------:

   This responds to a letter dated September 23, 2024, submitted on behalf of X, by

X’s authorized representative, requesting relief to file a late S corporation election under
§ 1362(b)(5) of the Internal Revenue Code.

                                              FACTS

   According to the information submitted, X was incorporated under the laws of

State on Date. X was eligible to elect S corporation treatment effective Date; however, X
inadvertently failed to timely file Form 2553, Election by a Small Business Corporation.
Since Date, X has filed tax returns consistent with S corporation treatment.

                                     LAW AND ANALYSIS

    Section 1361(a) provides that the term “S corporation” means, with respect to

any taxable year, a small business corporation for which an election under § 1362(a) is
in effect for such year.

  Section 1362(a) provides that a small business corporation may elect to be an S

corporation.

PLR-105306-25 2

   Section 1362(b)(1) provides that an election under § 1362(a) may be made by a

small business corporation for any taxable year (A) at any time during the preceding
taxable year, or (B) at any time during the taxable year and on or before the 15th of the
third month of the taxable year.

   Section 1362(b)(3) provides that if a small business corporation makes an

election under § 1362(a) for any taxable year, and such election is made after the 15th
day of the third month of the taxable year and on or before the 15th day of the third
month of the following taxable year, then such election will be treated as made for the
following year.

   Section 1362(b)(5) provides that if (A) an election under § 1362(a) is made for

any taxable year after the date prescribed by § 1362(b) for making such election for
such taxable year or no such election is made for any taxable year, and (B) the
Secretary determines that there was reasonable cause for the failure to timely make
such election, the Secretary may treat such an election as timely made for such taxable
year.

                                 CONCLUSION

    Based solely upon the facts submitted and representations made, we conclude

that X has established reasonable cause for not making a timely S election and is
eligible for relief under § 1362(b)(5). Accordingly, X's S corporation election will be
treated as timely made for its taxable year beginning on Date. This ruling is contingent
on X filing Form 2553, Election by a Small Business Corporation, with an effective date
of Date, with the appropriate Service Center within 120 days from the date of this ruling.
A copy of this letter should be attached to the Form 2553 filed with the Service Center.

    Except as specifically set forth above, we express or imply no opinion concerning

the federal tax consequences of the facts described above under any other provision of
the Code. Specifically, we express or imply no opinion concerning whether X otherwise
qualifies as an S corporation for federal tax purposes.

   The ruling contained in this letter is based upon information and representations

submitted by the taxpayer and accompanied by a penalty of perjury statement executed
by an appropriate party. While this office has not verified any of the material submitted
in support of the ruling request, it is subject to verification on examination.

  This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) of the

Code provides that it may not be used or cited as precedent.

PLR-105306-25 3

                                                Sincerely,


                                                ____________/s/_______________
                                                Christiaan T. Cleary
                                                Senior Technician Reviewer, Branch 1
                                                Office of Associate Chief Counsel
                                                (Passthroughs, Trusts, and Estates)

Enclosure:

Copy of this letter for section 6110 purposes

cc: ----------------------------
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