What This Letter Means

Letter 2359C tells a partnership or corporation that its Form 8716 was unacceptable. Form 8716 is the election under Internal Revenue Code section 444 to use a tax year other than the entity's required tax year. Partnerships, S corporations (including C corporations electing S status), and personal service corporations can make this election.

The IRS returns the Form 8716 with this letter and does not process it.

The Most Common Reason

The election was filed in error. A typical example: the entity asked for a December 31 year end under section 444, but December 31 is already its required tax year. You don't need a section 444 election to use your required tax year. The letter explains that you asked for the required year and aren't making a section 444 election.

What to Do

  • Read the letter to see exactly why the form came back.
  • If you meant to use your required tax year, you don't need to refile Form 8716.
  • If you meant to choose a different fiscal year, review the section 444 rules before refiling. There are limits on how far the year can be deferred, a section 444 election can only be made once, and once an election is terminated another can't be made.
  • Keep the letter and the returned form with the entity's permanent records.

Don't Confuse It With a Denial

This letter is about a Form 8716 the IRS can't accept as filed. Approvals and denials of a valid Form 8716 come on different correspondence. If you aren't sure which tax year the IRS has on file for the entity, confirm it before you file the next return. Filing on the wrong year end creates problems that take time to unwind.

If you received Letter 2359C and need help sorting out your entity's tax year, call us at (813) 229-7100.