IRS eases late "check-the-box" election procedures.

• Author: Kautter, David J.

Rev. Proc. 2002-59 permits a newly formed entity an automatic extension to file a late initial entity-classification ("check-the-box") election up to the due date of the entity's first Federal return (excluding extensions). It modifies and supersedes Rev. Proc. 2002-15 by extending the time from six months to the Federal return's due date.

Discussion

For an entity seeking treatment as a disregarded entity, the return due date is the due date of its sole owner's return for the tax year in which the entity was formed. An election under Rev. Proc. 2002-59 must be effective as of the entity's formation date. The procedure does not apply to a subsequent election to change classification.

A newly formed entity may request relief under Rev. Proc. 2002-59 to file a late initial check-the-box election if:

1. It failed to obtain a classification as of the formation date, solely because it did not timely file Form 8832, Entity Classification Election, under Regs. Sec. 301.7701-3(c) (1);

2. The due date of the Federal return for the tax year beginning with the date of the entity's formation (excluding extensions) has not passed (regardless of whether the entity was actually required to file a return); and

3. It has reasonable cause for failing to make a timely initial election.

If the entity meets the three requirements, it may file Form 8832 on or before the Federal return's due date (excluding extensions)...