Small Business Corporations Get Tax Relief

WASHINGTON - The Internal Revenue Service issued a revenue procedure today that will significantly ease the burden on small business corporations that filed their S corporation elections late.

Before the passage of the Small Business Job Protection Act of 1996, there was no relief for late S corporation elections. The change in the law gave the IRS the authority to treat late S corporation elections as timely filed elections.

Before today's new procedure, the only way corporations could seek this relief was to request a private letter ruling. The new procedure allows corporations to seek relief without incurring a user fee for requesting a private letter ruling. The revenue procedure allows a corporation to request relief by writing to the local service center, if the late election was filed within six months of the due date of the original S corporation election.

Further information can be found in Revenue Procedure 97-40 which will be published in Internal Revenue Bulletin 1997-33 dated August 18, 1997.

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