What the Form Is For
Form 2553 is the official document a corporation uses to elect S corporation status with the Internal Revenue Service. When you file this form, you're telling the IRS that your corporation wants to be treated as an "S corporation" rather than a regular "C corporation" for tax purposes.
Why the Election Matters for Taxes
The main difference matters to your wallet: instead of the corporation paying taxes on its profits and then you paying taxes again when you receive dividends (double taxation), an S corporation's income, deductions, and credits flow through directly to shareholders' personal tax returns. The corporation itself generally doesn't pay federal income tax, though it may owe tax on certain specialized income.
Eligibility Requirements
To qualify, your corporation must meet specific requirements: it must be a domestic corporation with no more than 100 shareholders, have only eligible shareholders (generally U.S. citizens or residents, certain trusts, and estates), and have only one class of stock. Think of Form 2553 as your corporation's application to join this special tax treatment club.
Information and Consents Required
The form requires signatures from all shareholders consenting to the election, information about the corporation's tax year, and details about each shareholder's stock ownership. An entity eligible to be treated as a corporation (like an LLC) can also use this form to simultaneously elect corporate classification and S corporation status.
When You'd Use Form 2553 (Late/Amended)
Standard Filing Deadlines
Timing is critical with Form 2553. For the election to take effect for your current tax year, you must file no later than two months and 15 days after the beginning of that tax year. For a calendar-year corporation wanting S status starting January 1, the deadline would be March 15. Alternatively, you can file any time during the previous tax year.
Late Election Relief
Miss the deadline? You're not necessarily out of luck. The IRS provides relief for late elections under Rev. Proc. 2013-30. If you can demonstrate reasonable cause for the delay and have acted diligently to correct the mistake once discovered, you can request late election relief by filing Form 2553 within three years and 75 days of your intended effective date.
How to Request Late Election Relief
Write "FILED PURSUANT TO REV. PROC. 2013-30" at the top of the form and include a statement explaining your reasonable cause.
Exception to the Three-Year-and-75-Day Rule
There's an even more generous exception to the three-year-and-75-day rule: if your corporation and all shareholders have consistently reported income as an S corporation on all tax returns since the intended effective date, at least six months have passed since you filed your first Form 1120-S, and the IRS hasn't notified you of any problems within those six months, you can still request relief beyond the standard timeframe.
Effect of Late Filing and Amended Elections
Late filing typically means your election becomes effective for the following tax year rather than the year you originally intended, unless you qualify for relief. You cannot file an "amended" Form 2553 in the traditional sense—if your election was accepted but information was incorrect, you'd need to contact the IRS to address specific issues.
Key Rules
Shareholder Consent Requirement
Several non-negotiable rules govern S corporation elections. First, all shareholders must consent. If even one shareholder fails to sign the consent statement in Column K of Form 2553 (or provide a separate consent), the election fails. This includes individuals, their spouses (for community property states), trustees, and anyone holding stock at any
