Form 2553 late filing: Making up for lost time on S Corp elections

If you’re a small business owner, you could see significant pass-through taxation benefits from becoming an S Corporation.  You may be wondering when to file Form 2553 and what to do if you are doing a Form 2553 late filing. We’re here to help – read on to learn about the S Corporation election.

Form 2553 filing deadline

The deadline to file Internal Revenue Service (IRS) Form 2553 depends on whether you have recently completed your business entity formation or if you’ve been an entity for a while. 

For new entities (including LLCs, partnerships, and corporations), Form 2553 must be filed within two months and 15 days from the beginning of the business’s tax year. IRS guidelines state that a business’s first tax year begins:

• When the entity has shareholders or members (for LLCs, this usually occurs when the articles of organization are filed);
• When the entity acquires assets; or
• When the entity begins doing business.

For existing entities, most commonly LLCs and corporations but can include partnerships, Form 2553 must be filed anytime during the prior tax year, or by the 15^th day of the third month of the tax year the election is to apply (generally March 15^th).

If you don’t file Form 2553 by the deadline, your business will not receive S Corporation status until the following tax year, unless you qualify for late election relief.

Form 2553 late filing and S corporation late election relief

So, what happens if you failed to file in the appropriate timeframe but still want to make an S Corp election? Fortunately, a late election relief procedure is in place.

Generally, a qualifying entity may request late election relief when the election wasn’t filed in a timely manner or there was a mistake on the form.

Requirements for a Form 2553 late filing S corporation election

You can file for a late S Corp election up to 3 years and 75 days after its proposed effective date!  In order to qualify and receive retroactive tax treatment, you must also meet the following eligibility requirements:

1. Act like an S Corp: You must have conducted business in a manner consistent with your intent to be an S Corporation from the proposed effective date until the time you file for late relief. For example, you followed all tax filing requirements of an S Corporation, this includes you and any other shareholders.
2. Have a good excuse: You must have reasonable cause for filing late or for mistakes on your initial filing.  For example, you didn’t know that you needed to submit Form 2553.
3. Meet normal requirements: Your business meets all the requirements to be an S Corporation.   

Contact your Block Advisors tax professional for more information.

Form 2553 late filing follow-up with IRS

After filing Form 2553, the IRS will send either an acceptance or denial letter to the business within 60 days of filing. If the election is accepted, the letter will show the effective date.

If you don’t receive a letter within 60 days of filing Form 2553, then you should contact the IRS at 1-800-829-4933.

Block Advisors can help

We know that completing IRS forms can be intimidating.  You are not alone – Block Advisors is here to help. If you are ready to make an S Corp election, we can help you complete Form 2553. Visit our online business registration tool and select “LLC+S Corp” to get started. 

If you’re not sure and would like to learn more about tax planning, tax savings, and tax benefits for your Small Business Corporation, schedule time to meet with one of our Small Business Certified Tax Pros. 

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