Election of S-Status

[abys32]

What is the name of your state (only U.S. law)? FL

I opened a corporation in February and opened a bank account under the corporation at the end of March. I failed to file 2553 within 2 months and 15 days. It is now about 3 months. The accountant gave me form 2553 with an empty box E-he says he just forgot to fill it in. L says "date acquired - 4/19/09," a date abritrarily chosen by the accountant. I called to speak to him because this date (section E) actually seems pretty important for this form. He said to put 4/19/09 in box E (beginning of tax year). It seems simple to seek relief if the only reason you do not have s-status is because you did not file on time, according to the instructions. Does that sound correct? Two weeks doesn't seem like a big deal, but could this cause a problem?

[abys32]

Originally Posted by abys32

What is the name of your state (only U.S. law)? FL

I opened a corporation in February and opened a bank account under the corporation at the end of March. I failed to file 2553 within 2 months and 15 days. It is now about 3 months. The accountant gave me form 2553 with an empty box E-he says he just forgot to fill it in. L says "date acquired - 4/19/09," a date abritrarily chosen by the accountant. I called to speak to him because this date (section E) actually seems pretty important for this form. He said to put 4/19/09 in box E (beginning of tax year). It seems simple to seek relief if the only reason you do not have s-status is because you did not file on time, according to the instructions. Does that sound correct? Two weeks doesn't seem like a big deal, but could this cause a problem?

I bet accountants could debate this one for hours....its that interesting.

[mtpockets]

There are at least two IRS Revenue Procedures that allow for late filing of an S election. If your accountant cannot figure out how to do this, get another accountant.

(I am not joking. You should be very worried about an accountant who cannot solve such a simple problem.)

[abys32]

Originally Posted by mtpockets

There are at least two IRS Revenue Procedures that allow for late filing of an S election. If your accountant cannot figure out how to do this, get another accountant.

(I am not joking. You should be very worried about an accountant who cannot solve such a simple problem.)

It seems like it would be sufficient to write in the obvious designated space "The corporation fails to qualify to elect to be an S corporation soley because of the failure to timely file Form 2553."

What could be the consequence of that?

(Yeah-a little worried for sure)

[davew128]

Originally Posted by abys32

I bet accountants could debate this one for hours....its that interesting.

How much are you willing to bet? I wouldn't spend 30 seconds discussing it.

[LdiJ]

Originally Posted by abys32

It seems like it would be sufficient to write in the obvious designated space "The corporation fails to qualify to elect to be an S corporation soley because of the failure to timely file Form 2553."

What could be the consequence of that?

(Yeah-a little worried for sure)

There is a space right on the 2553 to explain why you are late in filing the form. Any accountant who knows anything at all about S-corps will be able to look up the appropriate Rev Proc and would tell you to explain why you are late and to ask for relief under that Rev Proc. If I was still at work I would tell you which one it is, but I am not and I don't have time to search it out.

This really is NOT a problem, you just have to include the appropriate explanation and ask for relief under the appropriate Rev-Proc.

Your explanation can be as simple as, "The corporations accountant did not advise the corporation that it was necessary to fill out this form"....or "The corporation did not understand what the deadline was to file this form".

You might try doing a google search for "relief for late filing of form 2553", you might find the Rev-Proc number yourself.

[davew128]

I actually have the Rev. Proc. number memorized because of the number of times I run into people who well after the fact bother to tell me they formed a corp and automatically assumed their attorney "took care of everything".

[LdiJ]

Originally Posted by davew128

I actually have the Rev. Proc. number memorized because of the number of times I run into people who well after the fact bother to tell me they formed a corp and automatically assumed their attorney "took care of everything".

Yep, that's a classic. It also irritates me no end that an attorney charges serious money to set up corporations, and then leaves out the most critical step....so much so that I have started helping people do it themselves.

In my state you can set up the corporation online, and then its a simple matter to get the EIN online and fill out the 2553 and send it in.

[tranquility]

While I don't have the proc. memorized, it does come up a lot. The IRS is very rigid on sending out the first letter, but is very accommodating once everything gets handled. Even though the regs are clear and seem to leave little wiggle, I'm going back to 2006 to do some returns as an S-corp filed as a C. (NOL carryforward will change.) Guy came in after years of letters. Did things as an S (Including K-1 and reporting on his personal return.), except for the details and proper paperwork.

Smart guy. Did it himself. Prepared corporate returns. Sole owner then transferred the numbers to his personal return. We make a lot of money from smart people.