Washington, D.C. (December 18, 2025) – In a letter to the Department of the Treasury and the Internal Revenue Service (IRS), the American Institute of CPAs (AICPA) urged the establishment of a separate, lower user fee category for private letter ruling requests related to S corporations under section 1362(b)(5) and section 1362(f) that involve straightforward, low-complexity cases. These rulings are commonly requested to obtain relief from inadvertent S corporation election or compliance failures, including late or incomplete filings.
The AICPA’s letter proposes that Treasury and the IRS establish a separate user fee category for private letter rulings under section 1362(b)(5) and section 1362(f). Specifically, a separate category should be created for requests under section 1362(f) where the taxpayer cannot rely on Rev. Proc. 2013-30 solely because the three-year and seventy-five-day deadline has expired. The AICPA’s letter echoes concerns also raised in a 2016 AICPA comment letter recommending reduced user fees for these types of requests.
The AICPA believes establishing a separate user fee category is warranted for the following reasons:
Section 1362(f) remains as the only source of relief for cases in which the sole failure to make an effective S corporation election or the sole reason for an inadvertent termination is the failure to timely make an electing small business trust electionor an election for a qualified subchapter S trust. Revenue Proc. 2013-30 is available only where relief is sought within three years and 75 days of the intended effective date of the election.
Requests for relief under section 1362(f) are not “comfort” rulings. They are required to establish or preserve the S corporation status of the entity and are essential to taxpayers who must maintain their tax-favored status in response to an inadvertent trust-related election failure.
While there was a recent increase in the small taxpayer gross income thresholds from $250,000 and $1 million to $400,000 and $10 million, it is expected that these new thresholds will subject small and closely held business taxpayers to the highest level of user fees.
“Creating a distinct category for these narrowly defined cases would better reflect the actual time and resources needed to process them,” said Michelle Zou, Senior Manager for Tax Policy & Advocacy with the AICPA. “Our letter’s recommendations would also align with the IRS’ guiding principles for determining user fees.”
About the American Institute of CPAs
The American Institute of CPAs (AICPA) is the world’s largest member association representing the CPA profession, with 397,000 members and a history of serving the public interest since 1887. AICPA members represent many areas of practice, including business and industry, public practice, government, education, and consulting. A founding member of the Association of International Certified Professional Accountants, the AICPA sets ethical standards for the profession, attestation standards, and U.S. auditing standards for private companies, not-for-profit organizations, and federal, state, and local governments. It develops and grades the Uniform CPA Examination, offers specialized credentials, partners across the profession to build future talent, and drives continuing education to advance the vitality, relevance, and quality of the profession.
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Background May 19, 2016 - Proposal to Reduce the User Fees Charged for S Corporation Private Letter Ruling Requests Under Sections 1362(b)(5) and 1362(f)
Contact: Veronica L. Vera
202-434-9215
Veronica.Vera@aicpa-cima.com