[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[S. 2271 Introduced in Senate (IS)]

112th CONGRESS
  2d Session
                                S. 2271

   To amend the Internal Revenue Code of 1986 to extend the time for 
        making S corporation elections, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 29, 2012

   Mr. Franken (for himself, Ms. Snowe, and Mr. Enzi) introduced the 
 following bill; which was read twice and referred to the Committee on 
                                Finance

_______________________________________________________________________

                                 A BILL


 
   To amend the Internal Revenue Code of 1986 to extend the time for 
        making S corporation elections, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Small Business Election 
Simplification Act''.

SEC. 2. EXTENSION OF TIME FOR MAKING S CORPORATION ELECTIONS.

    (a) In General.--Subsection (b) of section 1362 of the Internal 
Revenue Code of 1986 is amended to read as follows:
    ``(b) When Made.--
            ``(1) Rules for new corporations.--Except as provided in 
        paragraph (2)--
                    ``(A) In general.--An election under subsection (a) 
                may be made by a small business corporation for any 
                taxable year at any time during the period--
                            ``(i) beginning on the first day of the 
                        taxable year for which made, and
                            ``(ii) ending on the due date (with 
                        extensions) for filing the return for the 
                        taxable year.
                    ``(B) Certain elections treated as made for next 
                taxable year.--If--
                            ``(i) an election under subsection (a) is 
                        made for any taxable year within the period 
                        described in subparagraph (A), but
                            ``(ii) either--
                                    ``(I) on 1 or more days in such 
                                taxable year and before the day on 
                                which the election was made the 
                                corporation did not meet the 
                                requirements of subsection (b) of 
                                section 1361, or
                                    ``(II) 1 or more of the persons who 
                                held stock in the corporation during 
                                such taxable year and before the 
                                election was made did not consent to 
                                the election,
                        then such election shall be treated as made for 
                        the following taxable year.
                    ``(C) Election made after due date treated as made 
                for following taxable year.--If--
                            ``(i) a small business corporation makes an 
                        election under subsection (a) for any taxable 
                        year, and
                            ``(ii) such election is made after the due 
                        date (with extensions) for filing the return 
                        for such year and on or before the due date 
                        (with extensions) for filing the return for the 
                        following taxable year,
                then such election shall be treated as made for the 
                following taxable year.
            ``(2) Rules for existing c corporations.--In the case of 
        any small business corporation which was a C corporation for 
        the taxable year prior to the taxable year for which the 
        election is made under subsection (a), the rules under this 
        paragraph shall apply in lieu of the rules under paragraph (1):
                    ``(A) In general.--An election under subsection (a) 
                may be made by a small business corporation for any 
                taxable year--
                            ``(i) at any time during the preceding 
                        taxable year, or
                            ``(ii) at any time during the taxable year 
                        and on or before the 15th day of the 3d month 
                        of the taxable year.
                    ``(B) Certain elections made during 1st 2\1/2\ 
                months treated as made for next taxable year.--If--
                            ``(i) an election under subsection (a) is 
                        made for any taxable year during such year and 
                        on or before the 15th day of the 3d month of 
                        such year, but
                            ``(ii) either--
                                    ``(I) on 1 or more days in such 
                                taxable year and before the day on 
                                which the election was made the 
                                corporation did not meet the 
                                requirements of subsection (b) of 
                                section 1361, or
                                    ``(II) 1 or more of the persons who 
                                held stock in the corporation during 
                                such taxable year and before the 
                                election was made did not consent to 
                                the election,
                then such election shall be treated as made for the 
                following taxable year.
                    ``(C) Election made after 1st 2\1/2\ months treated 
                as made for following taxable year.--If--
                            ``(i) a small business corporation makes an 
                        election under subsection (a) for any taxable 
                        year, and
                            ``(ii) such election is made after the 15th 
                        day of the 3d month of the taxable year and on 
                        or before the 15th day of the 3rd month of the 
                        following taxable year,
                then such election shall be treated as made for the 
                following taxable year.
                    ``(D) Taxable years of 2\1/2\ months or less.--For 
                purposes of this paragraph, an election for a taxable 
                year made not later than 2 months and 15 days after the 
                first day of the taxable year shall be treated as 
                timely made during such year.
            ``(3) Authority to treat late elections, etc., as timely.--
        If--
                    ``(A) an election under subsection (a) is made for 
                any taxable year after the date prescribed by this 
                subsection for making such election for such taxable 
                year or no such election is made for any taxable year, 
                and
                    ``(B) the Secretary determines that there was 
                reasonable cause for the failure to timely make such 
                election,
        the Secretary may treat such an election as timely made for 
        such taxable year.
            ``(4) Manner of election.--Elections may be made at any 
        time as provided in this subsection by filing a form prescribed 
        by the Secretary. For purposes of any election described under 
        paragraph (1), the Secretary shall provide that the election 
        may be made on any timely filed small business corporation 
        return for such taxable year, with the consents of all persons 
        who held stock in the corporation during such taxable year 
        included therewith.
            ``(5) Secretarial authority.--The Secretary may prescribe 
        such regulations, rules, or other guidance as may be necessary 
        or appropriate for purposes of applying this subsection.''.
    (b) Revocations.--Paragraph (1) of section 1362(d) of the Internal 
Revenue Code of 1986 is amended--
            (1) by striking ``subparagraph (D)'' in subparagraph (C) 
        and inserting ``subparagraphs (D) and (E)'', and
            (2) by adding at the end the following new subparagraph:
                    ``(E) Authority to treat late revocations as 
                timely.--If--
                            ``(i) a revocation under subparagraph (A) 
                        is made for any taxable year after the date 
                        prescribed by this paragraph for making such 
                        revocation for such taxable year or no such 
                        revocation is made for any taxable year, and
                            ``(ii) the Secretary determines that there 
                        was reasonable cause for the failure to timely 
                        make such revocation,
                the Secretary may treat such a revocation as timely 
                made for such taxable year.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to elections for taxable years beginning after the date of the 
enactment of this Act.
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