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

A trust that missed its deadline to elect Electing Small Business Trust status can still obtain late ESBT election relief, and the route depends entirely on timing. Within three years and 75 days of the intended effective date, the trust qualifies for streamlined automatic relief under Revenue Procedure 2013-30 at no cost. After that window closes, the only remaining option is a Private Letter Ruling from the IRS National Office, with a user fee that starts at $2,700 and typically runs to $14,500 or more.¹ Acting quickly is what keeps the fix cheap.

Why the Fix Can’t Wait

S corporations can only have certain kinds of shareholders. Most trusts are not eligible, and the ESBT is one of the narrow exceptions carved out by federal tax law.² A trust that holds S corporation stock without a valid ESBT election in place is an ineligible shareholder. That alone can trigger an involuntary termination of the corporation’s S election, dropping it back to C corporation status by default.

The damage compounds. The corporation starts paying corporate-level income tax, shareholders face a second layer of tax on distributions, and a corporation whose S election has terminated generally cannot re-elect S status for five full tax years unless the IRS grants early consent.³ Curing a late ESBT election protects every shareholder, not just the trust.

Automatic Relief Under Revenue Procedure 2013-30

Revenue Procedure 2013-30 is the IRS’s streamlined fix for late ESBT elections, and it is the preferred route by a wide margin.⁴ No user fee is required, and the IRS does not need to issue a ruling.⁵ File the corrected paperwork with the right statements attached, meet every condition, and the election is treated as if filed on time.

Who Qualifies

Every one of the following conditions must be met:

The trustee intended the trust to be treated as an ESBT as of the desired effective date.
The request is filed within three years and 75 days after that intended effective date.⁴
The only reason the trust failed to qualify as an ESBT was the missed election filing. A separate eligibility problem, such as a corporate beneficiary, takes automatic relief off the table.
The failure to file was inadvertent, and the trustee acted diligently to correct it once discovered.⁶
The S corporation and all shareholders reported income consistent with the S election being in effect for the entire gap period.

That last condition is where most problems surface. If the corporation filed a C corporation return for any year in the gap, or shareholders reported income on a different basis, automatic relief isn’t available and the trust has to pursue a PLR instead.

Confirm the trust itself still meets the underlying ESBT requirements before filing. Every beneficiary must be an individual, an estate, or a qualifying charitable organization; no interest in the trust can have been acquired by purchase; and each potential current beneficiary counts as a separate S corporation shareholder for the 100-shareholder cap.² If any of those is a problem, the missed election isn’t the sole reason the trust failed to qualify, and the automatic route is closed.

What to File

The trustee prepares an election statement containing the same information required for a timely ESBT election, with additional statements the revenue procedure demands. At the top of the election form, write FILED PURSUANT TO REV. PROC. 2013-30.⁶ That header signals streamlined relief rather than a regular election.

The package includes three supporting statements:

An inadvertence statement, signed by the trustee under penalties of perjury, describing the failure and the steps taken to correct it.
A beneficiary certification from the trustee confirming that all potential current beneficiaries meet the S corporation shareholder requirements and that the trust satisfies every ESBT requirement except for the missed election itself.⁶
Shareholder statements from everyone who held stock during the gap period, attesting that they reported income consistent with the S corporation election being in effect.

The election form itself must identify the trust, the S corporation, the trust’s beneficiaries, and the date the trust acquired the S corporation stock.² The trustee is the person responsible for signing and submitting it.

How to Submit It

There are three accepted methods. The trustee can attach the election form to the S corporation’s current-year Form 1120-S, attach it to a late-filed prior-year Form 1120-S, or file the election form independently with the IRS service center that handles the S corporation’s returns.⁶ When attaching to a Form 1120-S, that return must also state at the top INCLUDES LATE ELECTION(S) FILED PURSUANT TO REV. PROC. 2013-30.

When Automatic Relief Isn’t Available

If the three-year-and-75-day window has closed, or the trust can’t meet one of the other conditions, the only remaining path is a Private Letter Ruling from the IRS National Office. The IRS reviews the facts, applies a legal standard, and issues a binding ruling specific to the taxpayer. Approval is not guaranteed.

The standard is stricter than for automatic relief. The trustee must demonstrate reasonable cause for the late election and show that granting relief would not prejudice the government’s interests. A detailed factual narrative explaining what went wrong, why it wasn’t caught sooner, and what the trust has done to fix it is the core of the submission. Thin explanations get denied.

The cost is substantial. The standard user fee for a late-election PLR is $14,500, with a reduced fee of $2,700 available for taxpayers with gross income under $250,000.¹ Most taxpayers also hire a tax attorney or CPA to prepare the submission, which adds thousands in professional fees. The all-in cost of a PLR routinely exceeds $20,000.

Processing can stretch six months or longer, and the corporation’s tax status stays in limbo throughout. That is the practical case for catching a missed ESBT election inside the automatic-relief window: the same fix, done sooner, costs nothing.

The Underlying Election Deadline for Reference

For a timely ESBT election, the trustee files the election statement with the IRS service center where the S corporation files its income tax return.² The election can be effective up to two months and 15 days before the date it is filed, or up to 12 months after. If the trust already held the stock when the S corporation made its own S election, the ESBT election deadline aligns with that corporate filing. Missing any of those windows is what sends the trustee to Revenue Procedure 2013-30 or, if too much time has passed, to a Private Letter Ruling.

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