New Late Check-the-Box Election
IRS recently released Revenue Procedure 2009-41 which deals with late Check-the-box elections.
Background – The check-the-box provisions permit an entity that is not a corporation to elect to be taxed as a corporation. The normal procedure is to file a Form 8832 by the 15th day of the 3rd month of the first year the entity wants to be taxed as a corporation. This procedure has been available for several years. If the taxpayer did not timely file the Form 8832, Revenue Procedure 2002-59 permits a taxpayer to file a late election if the taxpayer attaches a statement explaining a reasonable cause for the lateness to a properly signed Form 8832 and files such by the due date (excluding extensions) of the first tax return for which the C corporation status is desired.
New – Revenue Procedure 2009-41 now provides more relief for taxpayers who did not make a timely election on Form 8832 AND do not qualify for the relief under Revenue Procedure 2002-59 (discussed above). New Revenue Procedure 2009-41 permits a taxpayer to make a late Form 8832 election as late as 3 years and 75 days after the requested beginning date of the Form 8832 election. This is basically the entire statute of limitations for a corporation excluding extensions. This Revenue Procedure replaces the need to file for a letter ruling as found in regulations 301-9100-3.
This relief applies to:
1) An entity that is not a corporation that fails to qualify as corporation due to failure to file the election form (Form 8832) timely,
2) The entity is seeking relief for a late election and has reasonable cause for failure to make the timely election, and
3) The entity (and owners) seeking to make the election has not filed a tax return for the first or any subsequent year the election was intended in a manner inconsistent with the election (i.e., has not filed as any other entity other than as a C corporation).
To take advantage of this late election Revenue Procedure, the entity must complete a properly signed election form (Form 8832) with “FILED PURSUANT TO REV. PROC. 2009-41” at the top, attach a copy of the statement showing the reasonable cause, and mail the entire package to the IRS Service Center where the entity files its income tax returns. A copy of the Form 8832 should be attached to the tax return for the first year for which the election is effective. The Form 8832 copy that is attached to the tax return does NOT need the “FILED…” notation nor a copy of the reasonable cause statement.
A taxpayer who has a letter ruling request pending with IRS on September 28, 2009, may withdraw the request and receive a refund of the user fee. Any ruling requests pending on September 28, 2009, will be processed by the IRS unless the entity notifies the national office that is will rely on the revenue procedure and withdraws its letter ruling request prior to the earlier of November 12, 2009, or the issuance of the letter ruling.
(An entity that is not a corporation that wishes to be taxed as an S corporation still follows the existing procedures for such election including those found in Revenue Procedure 2004-48. The late S election is not affected by this new Revenue Procedure.)
A copy of this Revenue Procedure can be found at www.irs.gov/pub/ by clicking on “irs-drop” and then on rp-09-41. We can also send you a pdf copy attached to an email if you desire.
Upcoming seminars are listed at end of this email.
This text has been shared with you courtesy of: David & Mary Mellem, EAs & Ashwaubenon Tax Professionals, 920-496-1065 (fax 920-496-9111) , , , and .
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SEMINAR SCHEDULE FOR SEPTEMBER
Various dates – National Center for Professional Education. Mary and/or David are presenting portions of the Corporation and Partnership seminar. For more information and registration form, go to www.ncpeseminars.com. Dates currently scheduled for David and/or Mary in September are: Sept 2 (Providence, RI), Sept 3 (Allentown, PA), and Sept 4 (Syracuse).
Sept 17-19 – Oregon Society of Tax Consultants in Canyonville, OR at the Seven Feathers Casino & Resort. On Sept 19, Mary and David are presenting Ethics, S Corporations, Credits, and Schedule D. For more information contact the Society at www.ostcinc.org. A registration form can be found under “Download Forms.”
Sept 22 – Wisconsin Association of Accountants in La Crosse. Mary and David are presenting Audit Proofing Business Returns, Sale of Residence/Business use of Home, Elections, Ethics, Corporation Liquidation, and K2s and Basis. For more information go to www.wiassociationofaccountants.com.
Sept 24 & 25 – Colorado Chapter of NATP in Cripple Creek at the Double Eagle Hotel. David & Mary are presenting various topics including AMT, Entity Review, Form 4797, Ethics, Technology, and Sale of Residence. For more information contact Bob Beecher at 303.758.7764.