S-CORP RELIEF PROVIDED BY THE IRS:

In Revenue Procedure 2022-19 the IRS has issued a series of “taxpayer assistance procedures” to resolve certain issues involving S corporations and their shareholders without requiring the issuance of a private letter ruling (PLR).

The IRS has now provided guidance on these procedures (Rev. Proc. 2022-19, 2022-41 IRB 282). The aim of the guidance is to reduce burdens, facilitate increased compliance with S-election and QSub election rules, and reduce costs and delays for completing transactions involving S corporations and QSubs.

The six areas for which issues are resolvable without a letter ruling are:

• Agreements and Arrangements with No Principal Purpose to Circumvent One Class of Stock Requirement
• Governing Provisions That Provide for Identical Distribution and Liquidation Rights
• Procedures for Addressing Missing Shareholder Consents, Errors with Regard to a Permitted Year, Missing Officer's Signature, and Other Inadvertent Errors and Omissions
• Procedures for Verifying S Elections or QSub Elections
• Procedures for Addressing a Federal Income Tax Return Filing Inconsistent with an S Election or a QSub Election
• Procedures for Retroactively Correcting One or More Non-Identical Governing Provisions

The guidance details the areas in which a letter ruling will not ordinarily be issued, thus amplifying and modifying Rev. Proc. 2022-3. Appendices to the revenue procedure provide a sample corporate governing provision statement and a sample shareholder statement.