Starr Gern Tax Department Obtains Eleven Private Letter Rulings from the IRS

July 2013

Chair of Starr Gern Tax Department Harvey R. Poe and Associate Jeffrey R. Pittard obtained eleven Private Letter Rulings from the Internal Revenue Service allowing 11 businesses to continue operating as S Corporations despite the businesses’ inadvertent S Corp election terminations.

A group of eleven businesses had previously filed valid S Corporation elections. However, when a shareholder of the businesses passed away, the shares of stock in the businesses were left in trust. The beneficiary of the trust receiving the decedent’s shares of stock in the businesses failed to timely elect to treat the trust as a Qualified Subchapter S Trust (QSST), which caused the businesses’ S Corporation elections to terminate. Many years later, when the businesses became aware of this oversight, the firm submitted eleven Private Letter Ruling Requests to the Internal Revenue Service seeking a determination that the terminations were inadvertent, that additional time to file the QSST election be granted, and that the QSST elections be effective retroactively to the date of the inadvertent terminations. The IRS agreed to do so and the businesses were all able to continue operating as S corporations without interruption.