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Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 1067
Experience:  Tax Preparer for 16 years; 25+ years experience as a real estate/corporate paralegal.
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Here is the situation: 1) I had faxed in a request to cancel

Resolved Question:

Here is the situation:

1) I had faxed in a request to cancel a 2553 election that I had made for a LLC
2) 5 minutes later I faxed in a new request to disregard the fax sent
3) I received mail from the IRS stating that the election had been cancelled and company was a LLC
4) I sent in a request to again get the 2553 S Corp taxation in effect
5) I received a letter from the IRS stating that only with the commissioner's approval would it be approved

Question:

1) My CPA said it's impossible to get the commissioner's review or approval. Is this true? What would be steps to submit asking for approval in this special case since it's the first year of company, first tax return and for some reason the IRS overlooked by fax asking to disregard the request to cancel the 2553 election

2) MY CPA said I should just file as an S Corp and then send a letter asking to classify the company as a S Corp. However I already received a letter stating company is reverted to a LLC. Is this a viable solution?

Thank you
Submitted: 1 year ago.
Category: Tax
Expert:  Barbara replied 1 year ago.

Welcome and thank you for giving me the opportunity to assist you with your tax question.

 

An LLC is a disregarded entity for tax purposes. My advice would be to file as an S corp using Form 1120S and include a copy of the 2553 which you previously sent in to the IRS.

 

Thank you.

Customer: replied 1 year ago.

Could you answer the questions I listed above please. I can't just gamble and need to make and proper decision evaluating what the potential success rate of each is and why.

Expert:  Barbara replied 1 year ago.

I am providing the best answer based on over 15 years of experience with IRS matters. To be honest, you can make 5 phone calls to the IRS asking the same question, speak to 5 different IRS representatives, and get 5 different answers. I do not believe that the IRS commissioner will give personal attention to your situation. It will be handled by an IRS representative.

 

Therefore, my advice to you remains the same. File as an S corporation and include the 2553 and/or a letter as your CPA suggested.

Expert:  Barbara replied 1 year ago.

Please see the following for additional information regarding Form 2553.

http://www.irs.gov/Businesses/Corporations/Filing-Requirements-for-Filing-Status-Change-(revised-11-15-11)

 

You can ask for a "private letter ruling" regarding your situation OR you can mail in a copy of the 2553 to the service center who sent you the notice.

 

Please be assured your "problem" is fixable.

 

Thank you.

Customer: replied 1 year ago.

What should I do first? Send a second letter to the service center asking for a private letter ruling or review?


 


What would get the fastest reply? I'm trying to avoid extra costs and if I file as a S corp then likely the IRS will still reject the petition and I have to amend the returns, right?

Expert:  Barbara replied 1 year ago.

My advice would be to mail Form 2553 to the IRS service center with a detailed letter explaining your situation and that you made a mistake by requesting that the S corporation be canceled. Start contacting (by telephone) the service center after two weeks to find out if your S corporation election is in effect. If so, you can then file the 1120S.

 

 

Customer: replied 1 year ago.

I did this once and received a letter from the IRS stating that unless a commissioner approved it could not be done. So, you're recommending doing it once more with a more detailed explanation of the mistake and requesting a private letter ruling or commissioner review PRIOR to doing the returns again?


 


Anything that you have found can be included as a viable reason (is my sending the 2nd fax saying I had made a mistake and to disregard the first and having it ignored a viable reason)?


 


Thanks.

Expert:  Barbara replied 1 year ago.
Yes. I am recommending that you re-submit Form 2553 with a detailed explanation of your mistake and apologize profusely for the mistake. To cover all of your bases, request that if approval cannot be granted automatically, you are respectfully XXXXX XXXXX private letter ruling.
Customer: replied 1 year ago.

Would it be better to request a private letter or commissioner review? And in the case of a private letter ruling, how much additional time could that add since I only have until September to file the final return (I already paid the taxes to the best estimate possible). Thanks.

Expert:  Barbara replied 1 year ago.
My advice would be to include your request for a private letter ruling when you re-submit Form 2553. I have no idea how much time it will take, but as I previously advised, I would mail everything as soon as possible and start following up with phone calls after two weeks.
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 1067
Experience: Tax Preparer for 16 years; 25+ years experience as a real estate/corporate paralegal.
Barbara and 6 other Tax Specialists are ready to help you
Expert:  Barbara replied 1 year ago.

Hi, Eric.

 

Just a short note to thank you for the positive rating. I wish you the best of luck with the IRS.

 

If you have any questions in the future, please feel free to put "for bkb1956" in the subject line, and I will be happy to assist you. Recommendations to family and friends are also always appreciated.

 

Best regards.

 

Barb

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