You represent “Ilicita Construction Co.”  (“Client”) a Construction company with close to thirty (30) years of  operating history. It was formed in Homestead, Florida in 1998 and  builds medium to large residential and commercial buildings. The company  started out with very limited earnings but now has a top line of  $100,000,000. It has six (6) shareholders who are members of the same  family, three brothers and three sisters. The Company has been filing S  corporation returns Form 1120S since it’s first Form 1120S in 1999 for  TYE 1998. The Company was formed as a corporation in the State of  Florida on June 30, 1998 according to Sunbiz.org and the original  corporate filings there.

The Company was selected for a random  Audit by the IRS in the summer of 2025. The IRS agent set an information  request which included a request for the original S Corporation  determination letter and the originally filed Form 2553, signed by all  of the shareholders.

As the CPA, with primary authority for the  engagement, you ask the Vice-President of the Client to check for the  records in the Company’s corporate book or elsewhere for copies of the  requested information. In addition, you send request letters to the  Client’s prior Law Firm and CPA firm.

Unfortunately, the original accountant, a  solo practitioner at the time, passed away 10 years ago and the  accounting firm dissolved. No records were available. The Client has  copies of S corp returns going back Seven (7) years and generally keys  records that long as required by law.

The Corporate book, unfortunately is not  well documented. Your review of the book indicates that there are no  minutes and shares have never been properly issued or just aren’t  present in the corporate book.  The transfer records have not been  filled out.  Copies of the SS-4 and 2553 if any are not in the corporate  book.   None of the Corporate officers recalls or knows where these  records are or if they were originally issued.

Each of the shareholders insists that  they signed and filed the Form 2553 shortly after formation. but no  shareholder or prior accountant had a copy of the original s Corp filing  or the approval letter from the IRS.  The IRS has no record of a 2553  being filed, but they did have the information on the SS-4 filed in 1998  that expressed a desire to be treated as an S corporation. Further,  Construction co has filed an S corporation return for each year of its  existence starting in 1999 and each shareholder has provided their  ratable share of tax attributes on Schedule E of their returns and has  included the income and paid tax on the amounts so reported,

The two oldest male shareholders recently  completed some estate planning transactions and each created one or more  irrevocable trusts for which an ESBT election was required and made. It  is thought that the filing of the ESBT election may have triggered the  audit. That is unclear.

In any event, you see that one of the  trusts, should have field a QSST rather than an ESBT Election. You need  to advise the Client that you need to change that.

As a result of the foregoing history, you  are asked to request a private letter ruling in accordance with Revenue  Procedure 2013-30 – Relief for Late S Corporation Election. Requesting  that the IRS retroactively approve S corporation status for the entity.

Please also pull IRM 21.7.4.4.4.11.2.1

You begin to get slightly nervous about  the ruling request and Pull the appropriate Ruling request information  available on Rev. Proc. 2025-1.   I provided this to you in Modules and  Teams

1. Your  first task is to draft the facts you will believe are required to  support a positive response from the IRS on your ruling request.

Draft a Client letter requesting the facts from the Client.  The facts you need are those that the Rev Proc. IRM and general S  corporation filings require. Start by accessing  at least two AI sources  and CCH answer Connect from the library and looking up Relief for Late S  corporation elections.

Use at least two AI sources to give you  any help with drafting a client letter.  Choose the one that in your  opinion is the best source and modify the letter into a format that  “you” believe expresses how you would want to communicate the requests  and potential solution to your client.

1. Your second task is to  Convert the ESBT Election to a QSST election see Treas. Reg.  §1.1361-1(m) for one of the Trusts. Look this up on your preferred AI  and on CCH Answer Connect. It should give you support information.
2. Using  Rev. Proc. 2025-1 and AI of your choosing as a guide, create the  template for the Private Letter Ruling you will write including the  required attachments.

SOLUTION

1. Draft Client Letter Requesting Facts

Letterhead
Ilicita Construction Co.
[Date]

To: [Client Contact, Vice-President]
From: [CPA Name], [CPA Firm]
Subject: Request for Information to Support Late S Corporation Election Relief

---

Dear [Client Contact],

As part of the IRS audit of Ilicita Construction Co. (“the Company”), we are preparing a request for relief under Revenue Procedure 2013-30 to retroactively approve the Company’s S corporation election. To ensure a complete and timely submission, we need your assistance in providing specific facts and documentation that the IRS requires for a positive Private Letter Ruling (PLR).

The IRS has requested copies of the original S corporation determination letter and Form 2553. Since these records are not currently available, we will need to provide sufficient factual support to demonstrate that:

1. The Company intended to be treated as an S corporation from its inception.

2. All six shareholders consented to the S corporation election and reported income, deductions, and tax attributes on their individual returns in a manner consistent with S corporation status for all years.

3. The Company has filed S corporation returns (Form 1120S) for all years since 1999.

4. No tax has been improperly avoided; shareholders have reported and paid their ratable share of income.

5. The Company has always met the eligibility requirements for S corporation status.

6. Any late filing of Form 2553 was unintentional.

To complete the PLR submission, please provide:

• A complete list of shareholders from inception to present, including their Social Security numbers and percentage ownership.

• Any documents showing corporate formation, SS-4, shareholder consent forms, and correspondence with prior accountants or legal counsel.

• Records of share issuance and any transfers among family members.

• Copies of all Form 1120S returns filed since inception (if available).

• Any additional documents that demonstrate shareholder intent and participation in the S corporation election.

• Confirmation that all shareholders have consistently reported income and paid taxes as S corporation shareholders.

Additionally, we have identified that one of the irrevocable trusts previously filed as an ESBT election should have filed as a QSST. We will assist with the process to correct this and ensure compliance.

We appreciate your prompt attention to gathering these records. The IRS requires a detailed and well-documented submission, and your assistance is critical to support our request for retroactive S corporation relief.

Please provide these materials no later than [specific date]. If any records are not available, please provide a written explanation of their absence.

Thank you for your cooperation.

Sincerely,
[CPA Name]
[CPA Firm]
[Contact Information]

---

2. Converting the ESBT Election to a QSST Election

Steps to Convert a Trust from ESBT to QSST:

1. Review Treas. Reg. §1.1361-1(m) to confirm that the trust qualifies as a QSST:

   • Only one current income beneficiary.

   • All income distributed annually to the income beneficiary.

   • Beneficiary must be a U.S. citizen or resident.

   • Beneficiary must consent in writing.

2. File Form 2553 for the QSST election:

   • Include the trust’s name, EIN, and effective date of S corporation election.

   • Attach written consent from the income beneficiary.

   • Ensure IRS acceptance of QSST election.

3. Attach a statement describing the correction of the prior ESBT election, referencing IRS guidance to make a retroactive QSST election if necessary.

---

3. Private Letter Ruling Template (PLR Submission)

Cover Letter (to IRS)

• Include Company name, EIN, type of ruling requested (Late S Corporation Election under Rev. Proc. 2013-30).

• Request retroactive approval of S corporation election to the IRS.

Required Sections (per Rev. Proc. 2025-1 and Revenue Procedure 2013-30):

1. Introduction

   • Explain Company history, formation date, and purpose.

   • State that the Company intended to be treated as an S corporation from inception.

2. Factual Background

   • Detail corporate formation, shareholders, ownership percentages, and family relationships.

   • Include record of prior 1120S filings, income reporting by shareholders, and consistency with S corporation treatment.

   • Document absence of the original 2553 and S corp determination letter.

3. Description of the Issue

   • Explain that Form 2553 was filed late (or lost) and that all shareholders consented to S corporation treatment.

   • Mention ESBT/QSST election correction.

4. Legal Authority

   • Cite Revenue Procedure 2013-30 (relief for late S corporation election).

   • Reference Treas. Reg. §1.1361-1(m) for QSST eligibility.

5. Representation of Intent

   • Confirm that all shareholders intended S corporation status.

   • Confirm consistent reporting and tax compliance.

6. Requested Ruling

   • Retroactive approval of S corporation status effective from 1998.

   • Approval of QSST election for the applicable trust, correcting prior ESBT filing.

7. Attachments

   • Form 1120S filings for seven most recent years.

   • Shareholder list and ownership percentages.

   • Copy of SS-4.

   • Statements from shareholders affirming intent and consent.

   • Written consent of trust beneficiary for QSST election.

   • Corporate organizational documents (as available).

8. Conclusion

   • Request IRS review and positive ruling.

   • Provide CPA contact information for follow-up.

---

Next Steps

1. Send the client letter to collect facts and missing records.

2. Prepare the QSST election for the trust, using the steps above.

3. Draft the PLR submission once all documentation is collected.

4. Attach all supporting documents to ensure IRS comfort with retroactive approval.

The post Request for Information to Support Late S Corporation Election Relief appeared first on Skilled Papers.