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May 02, 2018 at 04:07 PM
(Photo: Allison Bell/ThinkAdvisor)
Last year, the Internal Revenue Service stopped issuing private letter rulings involving certain S corporation matters, leaving these entities without a way to remedy several issues unique to them, according to American Institute of CPAs’ tax executive committee.
In a letter sent Tuesday to the IRS, Annette Nellen, the chair of the organization’s tax executive committee, AICPA asked that the agency clarify its informal policy not to issue private letter rulings.
Nellen wrote that to elect S corporation status, a business must qualify as a small business corporation and file a valid election on Form 2553.
However, certain procedural defects may make an S election invalid if the entity fails to qualify as a small business corporation at the time it files its S election, she said. Moreover, if an entity that validly elected as an S corporation ceases to qualify as a small business corporation, its S election terminates.
