How to Get Relief Under Revenue Procedure 2000-45

The Internal Revenue Service (IRS) provides administrative relief for taxpayers who miss the deadline for certain tax elections. Revenue Procedure 2013-30 offers a simplified method for obtaining relief for late S corporation and other entity classification elections. This process is intended for situations where the failure to file was unintentional.

Eligibility for Relief

The primary requirements are that the taxpayer acted reasonably and in good faith, and that granting the relief will not prejudice the interests of the government. Acting in good faith can include relying on the advice of a qualified tax professional who failed to make or advise the taxpayer to make the election. Reasonable cause might also be established if the taxpayer can demonstrate that unforeseen circumstances prevented a timely filing.

The government’s interests are considered prejudiced if granting relief would result in a lower tax liability for the taxpayer than if the election had been made on time. This determination also considers whether the tax year in which the election should have been made is closed by the statute of limitations. If granting the relief would require the IRS to unwind complex transactions or would negatively impact another taxpayer’s tax liability, the request may be denied. Relief must also be requested within 3 years and 75 days of the election’s intended effective date.

How to Request Relief

The request is made by filing the appropriate election form or a tax return. The taxpayer must take specific steps to ensure the IRS processes the request correctly under the provisions of the revenue procedure.

At the top of the election form or the associated tax return, the taxpayer must clearly write the statement: “FILED PURSUANT TO REV. PROC. 2013-30.” Without this specific heading, the filing may be processed as a standard late filing, and the intended election could be overlooked or denied.

In addition to the notation, a separate statement must be attached. This document needs to explain the reason for the failure to make the election on time, supporting the claim of having acted with reasonable cause and in good faith by describing the events that led to the missed deadline.

When Simplified Relief is Not Available

If a taxpayer does not meet the requirements for relief under Revenue Procedure 2013-30, another path is available. In these cases, the taxpayer cannot use the simplified procedure and must pursue a more formal and complex process.

The alternative is to request a Private Letter Ruling (PLR) from the IRS. A PLR is a written determination issued to a taxpayer by the IRS that interprets and applies tax laws to the taxpayer’s specific set of facts. Unlike the simplified relief procedure, this process is not guaranteed and requires a comprehensive submission detailing the taxpayer’s situation and legal justification for relief.

Requesting a PLR is a more involved undertaking. It requires the payment of a user fee to the IRS, which can range from a few hundred to several thousand dollars depending on the specifics of the request. The process is also time-consuming, often taking several months to receive a determination. Due to its complexity and cost, taxpayers typically seek the assistance of a tax professional to prepare and submit a PLR request.