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On or about August 25, 1992, Ms. McMurray prepared a letter
to respondent stating that the Form 2553 had been returned to NTI
in 1991 "for a date that needed to be added", and representing
that "someone mistakenly filed the form rather than completing
and return[ing]" it. Ms. McMurray enclosed the Form 2553, which
showed the March 18, 1991, date stamp, with the letter. The Form
2553 had been completed by Ms. McMurray to include an employer
identification number and an effective date of "*12/91" (instead
of the intended date of January 1, 1991) in the appropriate
areas. The Form 2553 was received, for the second time, and
filed by the Service Center on September 16, 1992.
Because of the date that it was received and filed, NTI was
notified by respondent in a notice dated October 12, 1992, that
its S corporation election would be effective beginning January
1, 1993. NTI did not respond to this notice. Between the August
25, 1992, letter and the October 12, 1992, notice, no
communication or correspondence was exchanged between NTI, or
anyone on its behalf, and respondent.
On September 20, 1993, Mrs. Dugan filed a 1992 Form 1120S
for NTI. The 1992 Form 1120S had been prepared by Ms. Tidwell
who at the time believed that the effective date of NTI's S
corporation election had been resolved by Ms. McMurray's August
25, 1992, letter to respondent.
At or about the time NTI's 1992 Form 1120S was prepared, Ms.
Tidwell discovered that NTI's S corporation election had been
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