Misssed S-Election?

[Gail in Virginia]

I have a client that we first prepared a return for 2019.  The copy of the 2018 return was an 1120S, and showed a "date of incorporation" of 2017.  We filed 1120S for 2019 and 2020, and have an extension to do an 1120S for 2021.  Client got a letter for 2019 return, and for 2020  and 2021 form 7004 stating that as an LLC they should be filing a 1065 unless they make election to be taxed as S, and that they time for relief has passed unless they apply for a private letter ruling.  (i hope this is clear in spite of trying to shorten to provide just the gist.)

My question is to wonder why they would not have gotten a letter for the 2018 return.  I have not seen a copy of the 2017 return so I don't know what was done then, but I am wondering with the shape the IRS is in how likely it is that the 2018 return was correct and sometime between now and then the IRS "lost" the election that was accepted earlier.  I am not wanting to re-do the 2019 and 2020 returns, for the business and the owners.  But I may not have a choice unless we go the PLR route.  I have not looked at what that will cost yet. 

[Lee B]

So you don't have a copy of the 2017 Tax Return. How about a copy of the CP 261 S Election Acceptance letter or the original 2553.

A a practical matter having to redo the returns as 1065s might have little or no effect on their personal tax returns.

Can you get more information from who prepared the 2018 return?

[Gail in Virginia]

Working on it but this is not my favorite client - poor organizational skills when it comes to their own company's records. 

[Lee B]

3 hours ago, Gail in Virginia said:

Working on it but this is not my favorite client - poor organizational skills when it comes to their own company's records. 

These are the most difficult clients, it's like bailing water from a leaky rowboat.