Trap 5 · The missed deadline · From Chapter 9
Late S Election Relief: Fixing the Missed Deadline
Missed the S-election deadline? Revenue Procedure 2013-30 grants automatic late relief when the company qualified all along and reasonable cause exists — file Form 2553 with the required statements, usually within 3 years and 75 days of the intended effective date.
The requirements
Eligible from day one, shareholders reporting consistently as an S-corp all along, and reasonable cause — inadvertence with consistent intent. Deliberate delay doesn't qualify.
The filing
Form 2553 with the required shareholder statements, marked filed pursuant to Rev. Proc. 2013-30. The statements attest the facts relief depends on — sign them carefully.
Beyond the window
Outside the revenue procedure's terms, only a private letter ruling remains: slow, costly, and discretionary. The cheap fix has a clock; don't miss the second deadline too.
Trap questions, answered
- What counts as reasonable cause?
- Inadvertence with consistent intent — the shareholders acted as an S-corp and reported that way. Deliberate delay doesn't qualify.
- What if shareholders reported inconsistently?
- Fix the returns first — consistent reporting is a condition of relief, not a suggestion.
- Is relief guaranteed?
- Within the revenue procedure's terms, effectively yes. Outside them, only a private letter ruling — slow, costly, discretionary.
From the practice: Relief filings need a practitioner
The other traps: Reasonable Compensation · Distributions vs Salary · S Election Eligibility · Built-In Gains Tax