Note:

IRS will notify the corporation, usually within 60 days after the Form 8869 is filed, that the Q-Sub election is accepted and when it will take effect, or if it is not accepted.

When an applicant submits an approved 8869 but a TC 082 is not posted on the Q-Sub's parent's account:

Process the certification application as if a TC 082 were located.

Once the certification process is complete, using the Form 4442, forward the approved 8869 to Entity application to have the TC 082 placed on the parent's module.

When an applicant submits a Form 966, Corporate Dissolution or Liquidation, filed in 2001 or prior, and claims that the previous corporation is now a subsidiary of an S Corporation (a Q-Sub), but a TC 082 cannot be located:

Forward a copy of the Form 966 to Entity for determination, using the Form 4442.

Request that Entity review the case and determine if the applicant would be considered a Q-Sub.

Once Entity has reviewed the case and made the determination, process your case correctly.

If

Then

1. TC082 is placed on the parent's module

Process as a Q-Sub.

2. The determination is not favorable

Reject the application.

3. If Form 8869 is requested

Suspend application.

Requestors that fail to provide the required information in (5) above must be corresponded with using Letter 3441, or Letter 3536, or by telephone.

When the applicant responds with requested information, continue with (6) above.

If the applicant was contacted by phone, allow 5 days for response. If no reply, issue 3441.

If the applicant fails to provide the required information within 30 days (60 days overseas), close the certification case as a no reply.

Certification of a Qualified Subchapter S Subsidiary requires the following verification:

Proof that the Form 8869 election was accepted and approved by the IRS

Filing of an S corporation return by the Parent S corporation

Verification that all shareholders on the Parent S corporation have provided written authorization that the requestor can receive their tax information

Verification that every shareholder listed on the S corporation's certification filed their required U.S. income tax return/extension as a resident of the U.S.

When all shareholders in the parent S corporation have filed their required returns, issue the standard Q-Sub certification paragraph.

When one or more of the shareholders in the parent S corporation failed to file the required return, or failed to provide a tax information disclosure authorization, issue the Q-Sub paragraph with the parent S corporation list indicating which shareholders have filed.

When all of the shareholders on the Parent S corp. failed to file the required individual tax return or extension, reject the Q-Sub application using Letter 4060.

If any one of the shareholders on the Parent S corp. failed to file or filed the individual tax returns claiming a foreign tax home (Form 2555 exclusion), issue certification with a list of the shareholders that filed Form 1040 as a U.S. resident.