Rp 2004-35

26 C F R 601 105 Ercrmrrinrior~ojr-crurrzs nnd

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Rev. Proc. 2004-35
S ECTION 1. PURPOSE

Thls revenue procedure provides automauc relief for certain taxpayers requesting relief for lare shareholder consents
for S corporaliun electianr; in community
properry states.

SECTION 2. BACKGROUND
Sect~on136 1 (a)(] ) of the Internal Revenue Code defines an "S corporation."
respect to any taxable year, as a small
business corporation for which an S
porarion election under secrlon 1362Ia) is
in effect for that year.
Section ] 362(a)(:) provides that an
bc
election to be an s
valid only if all persons who are share.
holders in the corporatjon on the day on
which !he election is made consent to the
clection.
Section 1. )362-6(b)(2)(i) of the Jncome T~~ Regulaliuns provides that when
corporation is owned by hasS[DCk
band and wife as comnlirnlty property
(or the income from tht slack is cfimnlutilty property), each perscln having a
community interest in the srock 01 income
therefrom must consent to the election,
Section 1,1362-6(h)(3)(iii) provides
that an electinn thar is t~rnelyfiled for any
taxable year and (],at wcluld be valid except
for the failure of any shareholder to file a
timely consen1 15 no, invalid if consents
are filed and it is shown to [he satlstacthe
tion of the service center with
cnrporarion files its income tax return fhar
( 1 ) there was reasonable cause for he failurc 10 file the consent, (2) the request for
the extension of time to file a consen[ is
nlade within a reasonable [lnlr under the
cjrcu~,~stances,
and ( 3 ) the lriterests of the
Government wj]l not be ltor~rdizedby
treating the elec~ionas valid

SECTION 3. SCOPE
This revcnuz procedure provides automatic rclicf for late filing of share-

June 7, 2004

holder consents for spouses of S corpora
under subchapter S. This jnforrnatinri trill
bc used to dclerrnlne whether Ihe eligibil~ t requirernrn~s
v
for obtaining relief have
been met. The collection of information is
required to obtain a benefit. The likely respondents are bu..

2004-23 I.R.B.

The estimared rolal annual repirning
burden is 500 hours.
T h e ectlrnated annunl burden pet resporldent varies from .5 hours lo 7 hours.
drpendlng on individual iircums~ances.
wlih an estima~edaverage burden of I
hour to complete :Re statement. The estimated number of respondents is 200.
The es!rrnatcd annual trequency of responses 1s on occasion.
Soaks or records rejatlng to a cnliection
of information must be retained as long
as their contents may become rnater~alin
the administration of any internal revenue
law. Grr~erallytax returns and tax rcturn

infurmation are c.c~nfidential,as rcclu ired
by 26 U.S.C. 6103.

SECTION 7 . DRAFTING;
INFORMATION
The principal author of t h revenue
~ ~
procedure is Jason T. Smyczek of the
Office of the Associate Chief Counsrl
iPassthroughs and Special Industries.j For
further informallon regarding this revzr~ue
procedure, conract Mr. Smyczek at (202)
622-3050 (not a toll-free call).

June 7, 2004