eMinutes Blog

Tardy S Corporation Election in New York

January 4, 2018

We’ve written before that a Tardy S Election Is No Reason To Freak Out. In that article, we discussed making a late federal S corporation election under a 2013 Revenue Procedure that permits corporations to obtain relief for a late S election that is made within 3 years and 75 days from the effective date of the election.[1] But what effect does a late S election have in New York, which requires an S corporation to make a separate election to be treated as a New York S corporation?

As it turns out, “[w]hen an S election is retroactively validated for federal purposes, pursuant to [Internal Revenue Code] section 1362(f), the [New York State Department of Taxation and Finance] may retroactively validate the New York State election” as well.[2] If validated by the Tax Department, the late New York S election will apply for any tax year within the period validated by the IRS.[3] Any retroactive validations require both the corporation and its shareholders to recognize the tax consequences of the New York S election for the retroactive period.[4]

To request a retroactively validated New York S corporation, a corporation must file Form CT-6 (Election by a Federal S Corporation to be Treated as a New York S Corporation) with the Tax Department, together with an attachment explaining the circumstances of the late filing and a copy of the federal approval letter.[5] Form CT-6 must include the effective date of the election, as well as the signatures of all of the corporation’s shareholders on the specified date.[6] In addition, all of the shareholders must have reported their income on all affected tax returns consistent with the S election for the year the election should have been made and all subsequent years.[7]

[1] Rev. Proc. 2013-30 § 4.02, 2013-36 I.R.B. 173.

[2] Instructions for Form CT-6, at 1. Revenue Procedure 2013-30 provides procedures for validating a late S election pursuant to section 1362(f) of the Internal Revenue Code, 26 U.S.C. § 1362(f), among other provisions. Rev. Proc. 2013-30 § 3.01, 2013-36 I.R.B. 173.

[3] Instructions for Form CT-6, at 1.

[4] Id.

[5] Id. at 2.

[6] Id.

[7] Id.

Our attorneys are admitted to practice law in California, New York, and Texas.
eMinutes places cookies on your device to give you the best user experience. By using our website, you agree to the placement of these cookies. Please read our updated Privacy and Cookie Policy.
css.php