Late ESBT Election Relief: Rev. Proc. 2013-30 Conditions and Filing

A trust that missed the deadline to elect Electing Small Business Trust status can still fix the problem, and the route depends on how much time has passed. File within three years and 75 days of the intended effective date and you qualify for free, automatic relief under Revenue Procedure 2013-30. Miss that window and the only remaining option is a Private Letter Ruling from the IRS National Office, with a user fee of $2,700 or $14,500 depending on income, plus professional fees that routinely push the total past $20,000. Late ESBT election relief is worth pursuing quickly because an invalid election means the trust is an ineligible S corporation shareholder, which terminates the company’s S status.

What a Missed Election Actually Costs

S corporations can only have certain kinds of shareholders, and most trusts are not on the list. The ESBT is a narrow exception, and the election is what makes the trust eligible.¹ Without a valid election in place, the trust holding the stock is an ineligible shareholder, and the corporation’s S election terminates involuntarily. The company reverts to C corporation treatment, corporate-level tax kicks in, and distributions get taxed a second time at the shareholder level.

The damage isn’t limited to the tax bill. A corporation whose S election has terminated generally cannot re-elect S status for five tax years unless the IRS grants early consent, and the burden falls on the corporation to show the termination was beyond its reasonable control.² Curing the trust’s missed election is what keeps the whole pass-through structure intact for every shareholder.

Automatic Relief Under Revenue Procedure 2013-30

Revenue Procedure 2013-30 is the streamlined fix, and it is by far the preferred route.³ There is no user fee, and the IRS does not issue a ruling.⁴ The trustee files corrected paperwork with the required statements attached, and if everything checks out, the IRS treats the election as if it had been filed on time.

The Five Conditions You Must Meet

Automatic relief is available only when every one of these is true:

The trustee intended the trust to be treated as an ESBT as of the desired effective date.
The relief request is filed within three years and 75 days after that intended effective date.³
The only thing that kept the trust from qualifying as an ESBT was the missed election. A separate eligibility problem, such as a corporate beneficiary, will disqualify the request.
The failure was inadvertent, and the trustee acted diligently to correct it once the mistake was discovered.⁵
The S corporation and all shareholders reported income for the gap period as though the S election had been in effect the whole time.

The consistency requirement is where most requests fail. If the S corporation filed a Form 1120 as a C corporation for any year during the gap, or if any shareholder reported income on a different basis, automatic relief is off the table and a Private Letter Ruling becomes the only option.

What to File

The trustee prepares an ESBT election statement containing everything a timely election would include: information identifying the trust, the S corporation, the potential current beneficiaries, and the date the trust acquired the stock.¹ At the top of the election form, write “FILED PURSUANT TO REV. PROC. 2013-30.”⁵ That header tells the IRS this is a request for streamlined relief and not an ordinary election.

Three additional statements go with the election:

A signed statement from the trustee, under penalties of perjury, explaining the inadvertent failure and the steps taken to fix it.
A trustee certification that every potential current beneficiary meets the S corporation shareholder rules and that the trust satisfies every ESBT requirement other than the missed election.⁵
Written statements from every shareholder who held stock during the gap period, confirming they reported income consistent with the S election being in effect.

How to Submit It

There are three ways to get the package to the IRS.⁵ The trustee can attach the election to the S corporation’s current-year Form 1120-S, attach it to a late-filed prior-year Form 1120-S, or file it independently with the IRS service center that handles the corporation’s returns. When the election rides along with a Form 1120-S, that return also needs a header at the top: “INCLUDES LATE ELECTION(S) FILED PURSUANT TO REV. PROC. 2013-30.”

When the Automatic Window Has Closed

Beyond three years and 75 days after the intended effective date, the trust’s only path is a Private Letter Ruling from the IRS National Office. This is not a form-check exercise. The IRS applies a legal standard, looks at the specific facts, and either grants or denies relief. Approval is not guaranteed.

The standard is stricter than for automatic relief. The trustee has to show reasonable cause for the late election and demonstrate that granting relief will not prejudice the government’s interests. The heart of the submission is a factual narrative that explains what went wrong, why the problem wasn’t caught sooner, and what has been done to correct it. Thin explanations get denied.

The cost is where the difference between the two routes becomes stark. The standard user fee for a late-election PLR is $14,500 under the current schedule, reduced to $2,700 for taxpayers with gross income under $250,000.⁶ Most taxpayers also hire a tax attorney or CPA to prepare the submission, and professional fees add thousands more. Total costs routinely exceed $20,000.

Processing times can stretch to six months or longer, and the S corporation’s tax status remains uncertain the entire time the ruling is pending. That uncertainty is the strongest argument for catching a missed election early. Once you’re inside the three-year-and-75-day window, the fix is paperwork and postage. Once you’re outside it, the fix is a legal proceeding.

Who Files and Who Signs

The trustee is the person responsible for making the ESBT election, whether the filing is timely or late.¹ The election goes to the IRS service center where the S corporation files its income tax return. The trustee signs the election statement, the inadvertence statement, and the beneficiary certification. Shareholders sign their own consistency statements.

Before filing under Rev. Proc. 2013-30, confirm the trust still meets the underlying ESBT eligibility rules on the date the election is intended to take effect: every beneficiary must be an individual, an estate, or a qualifying charitable organization, and no interest in the trust can have been acquired by purchase.¹ If any of those requirements is broken, the missed election is not the only defect, and automatic relief will not cure the problem.

Practical Sequence

Working the problem in order keeps the filing clean:

Identify the intended effective date of the ESBT election, which is usually the date the trust acquired S corporation stock.
Count forward three years and 75 days. If today falls inside that window, automatic relief is available; if it falls outside, plan for a PLR.
Confirm the trust meets every ESBT eligibility requirement other than the missed election, and confirm every shareholder reported income during the gap as though the S election were in effect.
Prepare the election statement with the Rev. Proc. 2013-30 header, the trustee’s inadvertence statement, the beneficiary certification, and shareholder consistency statements.
Submit the package with a Form 1120-S or independently with the service center handling the corporation’s returns.

Getting the filing in before the three-year-and-75-day cutoff is the single decision that most changes the cost and difficulty of the fix. After that date, the trust is not without options, but the options get expensive.

1
eCFR. 26 CFR 1.1361-1 – S Corporation Defined
2
eCFR. 26 CFR Part 1 – Small Business Corporations and Their Shareholders
3
Internal Revenue Service. Late Election Relief
4
Internal Revenue Service. Internal Revenue Bulletin 2026-1
5
Internal Revenue Service. Revenue Procedure 2013-30
6
Internal Revenue Service. Internal Revenue Bulletin 2025-1