Rp 2004-48

QTIP trust or property. As a result, the
decedent’s remaining GST tax exemption
will be automatically allocated pursuant to
§ 2632(e) and § 26.2632–1(d)(2) to the
QTIP trust or property for which the reverse QTIP election was made, based on
the value of the trust or property as finally
determined for federal estate tax purposes.
The relief provided by this revenue procedure does not include or grant permission
to allocate retroactively the decedent’s remaining GST exemption or to make a late
severance of a trust included in the gross
estate.
SECTION 5. EFFECTIVE DATE
.01 In General. This revenue procedure
is effective August 9, 2004.
.02 Transition Rule for Pending Letter
Ruling Requests. If an executor has filed
a request for a letter ruling seeking relief to file a reverse QTIP election under
§ 301.9100–3 and that letter ruling request
is pending in the national office on August 9, 2004, the executor may withdraw
the letter ruling request and receive a refund of its user fee if prior to September
23, 2004, the executor notifies the national
office that it will withdraw the letter ruling
request. If the executor does not so notify
the national office by September 23, 2004,
the national office will process letter ruling requests pending on August 9, 2004,
and will retain the user fee paid.
SECTION 6. PAPERWORK
REDUCTION ACT
The collection of information contained in this revenue procedure has been
reviewed and approved by the Office
of Management and Budget in accordance with the Paperwork Reduction Act
(44 U.S.C. 3507) under control number
1545–1898.
An agency may not conduct or sponsor,
and a person is not required to respond
to, a collection of information unless the
collection of information displays a valid
OMB control number.
The collection of information in this
revenue procedure is in section 4. This
information is required to be submitted to
the applicable service center in order to obtain an extension of time to make a late reverse QTIP election. This information will
be used to determine whether the eligibil-

2004–32 I.R.B.

ity requirements for obtaining relief have
been met. The collection of information is
required to obtain a benefit. The likely respondents are estates and trusts.
The estimated total annual reporting
burden is 54 hours.
The estimated average annual burden
per respondent is 9 hours to complete the
statements required under this revenue
procedure. The estimated number of respondents is 6.
There is no estimated annual frequency
of responses as the reverse QTIP election
is a one-time election.
Books or records relating to a collection
of information must be retained as long
as their contents may become material in
the administration of any internal revenue
law. Generally tax returns and tax return
information are confidential, as required
by 26 U.S.C. 6103.
DRAFTING INFORMATION
The principal author of this revenue
procedure is DeAnn K. Malone of the
Office of the Associate Chief Counsel
(Passthroughs and Special Industries). For
further information regarding this revenue
procedure, contact DeAnn K. Malone at
(202) 622–7830 (not a toll-free call).
26 CFR 601.105: Examination of returns and claims
for refund, credit, or abatement.
(Also §§ 1361, 1362; 301.7701–1, 301.7701–2,
301.7701–3, 301.9100–1, 301.9100–3.)

Rev. Proc. 2004–48
SECTION 1. PURPOSE
This revenue procedure provides a simplified method for taxpayers to request relief for a late S corporation election and a
late corporate classification election which
was intended to be effective on the same
date that the S corporation election was intended to be effective. Generally, this revenue procedure provides that certain eligible entities may be granted relief if the entity satisfies the requirements of section 4
of this revenue procedure.
SECTION 2. BACKGROUND
.01 S Corporation Elections.
(1) In general. Section 1361(a)(1) of
the Internal Revenue Code provides that

172

the term “S corporation” means, with respect to any taxable year, a small business corporation for which an election under § 1362(a) is in effect for that year.
Section 1362(b)(1) provides that a
corporation may make an election to be
treated as an S corporation for any taxable
year (A) at any time during the preceding
taxable year, or (B) at any time during the
taxable year and on or before the 15th day
of the 3rd month of the taxable year.
Section 1362(b)(3) provides that if (A)
a small business corporation makes an
election under § 1362(a) for any taxable
year, and (B) the election is made after the
15th day of the 3rd month of the taxable
year and on or before the 15th day of the
3rd month of the following taxable year,
then the election shall be treated as made
for the following taxable year.
(2) Late S corporation elections. Section 1362(b)(5) provides that if (A) an
election under § 1362(a) is made for any
taxable year (determined without regard
to § 1362(b)(3)) after the date prescribed
by § 1362(b) for making the election for
the taxable year or no election is made for
any taxable year, and (B) the Secretary determines that there was reasonable cause
for the failure to timely make the election, the Secretary may treat the election
as timely made for the taxable year (and
§ 1362(b)(3) shall not apply).
.02 Entity Classification Elections.
(1) In general. Section 301.7701–2(a)
of the Procedure and Administration Regulations defines a “business entity” as any
entity recognized for federal tax purposes
that is not properly classified as a trust under § 301.7701–4 or otherwise subject to
special treatment under the Code.
Section 301.7701–3(a) provides that a
business entity that is not classified as a
corporation under § 301.7701–2(b)(1), (3),
(4), (5), (6), (7), or (8) (an “eligible entity”)
can elect its classification for federal tax
purposes as provided in this section.
Section 301.7701–3(b)(1) provides
that, except as otherwise provided in paragraph (b)(3) of that section, unless the
entity elects otherwise, a domestic eligible
entity is (i) a partnership if it has two or
more members; or (ii) disregarded as an
entity separate from its owner if it has a
single owner.
Section 301.7701–3(c)(1) provides that
an eligible entity may elect to be classified
other than as provided in § 301.7701–3(b)

August 9, 2004

by filing Form 8832, Entity Classification
Election, with the service center designated on Form 8832.
Section 301.7701–3(c)(iii) provides
that the entity classification election will
be effective on the date specified by the
entity on the Form 8832 or on the date
filed if no date is specified on the election form. The effective date specified on
Form 8832 cannot be more than 75 days
before or more than 12 months after the
date the election is filed. If an election
specifies a date more than 75 days prior to
the date it was filed, the election will be
effective 75 days prior to the date it was
filed. If an election specifies a date more
than 12 months after the date it was filed,
the election will be effective 12 months
after it is filed.
(2) Late Entity Classification Elections.
Under § 301.9100–1(c) the Commissioner
may grant a reasonable extension of time
under the rules set forth in § 301.9100–2
and 301.9100–3 to make a regulatory election, or a statutory election (but no more
than six months except in the case of a taxpayer who is abroad), under all subtitles of
the Code, except subtitles E, G, H, and I.
Section 301.9100–1(b) defines the term
“regulatory election” as an election whose
due date is prescribed by a regulation published in the Federal Register, or a revenue
ruling, revenue procedure, notice, or announcement published in the Internal Revenue Bulletin.
Section 301.9100–3 provides that requests for relief under that section will be
granted when the taxpayer provides evidence to establish to the satisfaction of the
Commissioner that the taxpayer acted reasonably and in good faith, and that granting relief will not prejudice the interests of
the Government.
Rev. Proc. 2002–59, 2002–2 C.B. 615,
provides relief for an entity newly formed
under local law that requests relief for a
late initial classification election filed by
the due date of the entity’s first federal
income tax return (excluding extensions).
Rev. Proc. 2003–43, 2003–1 C.B. 998
provides a simplified method for taxpayers to request relief for late S corporation
elections where the entity fails to qualify as
an S corporation solely because of the failure to file the election timely with the applicable service center. Under the revenue
procedure, certain eligible entities may be
granted relief for failing to file these elec-

August 9, 2004

tions in a timely manner if the request for
relief is filed within 24 months of the due
date of the election.
Under § 301.7701–3T(c)(1)(v)(C), an
eligible entity that timely elects to be an
S corporation under section 1362(a)(1)
is treated as also having made an election to be classified as an association,
provided that (as of the effective date
of the election under section 1362(a)(1))
the entity meets all other requirements
to qualify as a small business corporation under section 1361(b). Section
301.7701–3T(c)(1)(v)(C) further provides
that the deemed election to be classified
as an association generally is effective as
of the effective date of the S corporation
election and will remain in effect until the
entity makes another entity classification
election under § 301.7701–3(c)(1)(i).
SECTION 3. SCOPE
.01 In General. An eligible entity that
seeks to be classified as a subchapter S corporation must elect to be classified as an
association under § 301.7701–3(c)(1)(i)
by filing Form 8832 and must elect to
be an S corporation under § 1362(a) by
filing Form 2553, Election by a Small
Business Corporation. In many situations, an entity may timely file Form
2553 but fail to file the Form 8832. Section 301.7701–3T(c)(1)(v)(C) applies to
these situations and deems an eligible
entity that timely files a Form 2553 to
also have filed a Form 8832. In other
situations, an eligible entity fails to file
a timely Form 2553. In these situations,
§ 301.7701–3T(c)(1)(v)(C) does not apply
and the entity would be required to obtain relief in a letter ruling. This revenue
procedure provides a simplified method
for requesting relief for those situations
not covered by § 301.7701–3T, provided
that the requirements of sections 4.01 and
4.02 of this revenue procedure are satisfied. The method provided in this revenue
procedure is in lieu of the letter ruling
process ordinarily used to obtain relief
for late elections under §§ 1362(b)(5),
301.9100–1, and 301.9100–3. Accordingly, user fees do not apply to corrective
action under this revenue procedure.
.02 Relief if this Revenue Procedure is
not Applicable. An entity that does not
meet the requirements for relief or is denied relief under this revenue procedure

173

may seek relief by requesting a letter ruling. The procedural requirements for requesting a letter ruling are described in
Rev. Proc. 2004–1, 2004–1 I.R.B. 1, or
its successors.
SECTION 4. RELIEF FOR LATE S
CORPORATION ELECTION AND
LATE CORPORATE CLASSIFICATION
ELECTION
.01 Eligibility for Relief. An entity may
request relief under this revenue procedure
if the following requirements are met:
(1) The entity is an eligible entity as
defined in § 301.7701–3(a);
(2) The entity intended to be classified
as a corporation as of the intended effective
date of the S corporation status;
(3) The entity fails to qualify as
a corporation solely because Form
8832 was not timely filed under
§ 301.7701–3(c)(1)(i), or Form 8832
was not deemed to have been filed under
§ 301.7701–3T(c)(1)(v)(C);
(4) In addition to section 4.01(3) of
this section, the entity fails to qualify as
an S corporation on the intended effective
date of the S corporation status solely because the S corporation election was not
filed timely pursuant to § 1362(b); and
(5) The entity has reasonable cause for
its failure to file timely the S corporation
election and the entity classification election.
.02 Procedural Requirements for Relief.
Within 6 months after the due date for the
tax return, excluding extensions, for the
first year the entity intended to be an S corporation), the corporation must file a properly completed Form 2553 with the applicable service center. The Form 2553 must
state at the top of the document “FILED
PURSUANT TO REV. PROC. 2004–48.”
Attached to the Form 2553 must be a statement explaining the reason for the failure
to file timely the S corporation election and
a statement explaining the reason for the
failure to file timely the entity classification election.
.03 Relief for Late S Corporation Election and Relief for a Late Corporate
Classification Election. Upon receipt of
a completed application requesting relief
under section 4 of this revenue procedure,
the Service will determine whether the
requirements for granting additional time
to file the elections have been satisfied and

2004–32 I.R.B.

will notify the entity of the result of this
determination. An entity receiving relief
under this revenue procedure is treated as
having made an election to be classified
as an association taxable as a corporation
under § 301.7701–3(c) as of the effective
date of the S corporation election.
SECTION 5. EFFECTIVE DATE
This revenue procedure is effective July
20, 2004. Any entity that meets the requirements of this revenue procedure as of
July 20, 2004, may seek relief under this
revenue procedure. This revenue procedure applies to requests pending with the
Service on July 20, 2004.
SECTION 6. PAPERWORK
REDUCTION ACT
The collection of information contained in this revenue procedure has been
reviewed and approved by the Office
of Management and Budget in accor-

2004–32 I.R.B.

dance with the Paperwork Reduction Act
(44 U.S.C. 3507) under control number
1545–1548.
An agency may not conduct or sponsor,
and a person is not required to respond
to, a collection of information unless the
collection of information displays a valid
OMB control number.
The collections of information in this
revenue procedure are in section 4.02.
This information is required to be submitted to the applicable service center in
order to obtain relief for a late Election
Under Subchapter S. This information will
be used to determine whether the eligibility requirements for obtaining relief have
been met. The collection of information is
required to obtain a benefit. The likely respondents are business or other for-profit
institutions.
The estimated total annual reporting
burden is 25,000 hours.
The estimated annual burden per respondent varies from .5 hours to 1 hour, depending on individual circumstances, with

174

an estimated average burden of 1 hour to
complete the statement. The estimated
number of respondents is 25,000.
The estimated annual frequency of responses is on occasion.
Books or records relating to a collection
of information must be retained as long
as their contents may become material in
the administration of any internal revenue
law. Generally tax returns and tax return
information are confidential, as required
by 26 U.S.C. 6103.
DRAFTING INFORMATION
The principal author of this revenue procedure is Rebekah A. Myers
of the Office of Associate Chief Counsel
(Passthroughs and Special Industries). For
further information regarding this revenue
procedure, contact Ms. Myers at (202)
622–3050 (not a toll-free call).

August 9, 2004