What Form 2553 Is For
Form 2553 is the official IRS document that corporations and certain limited liability companies use to elect S corporation status under section 1362 of the Internal Revenue Code. When a business makes this election, it transforms from a regular C corporation (which pays corporate income tax) into an S corporation, where profits and losses pass through directly to shareholders' personal tax returns. This election fundamentally changes how your business is taxed—instead of the company paying federal income tax, you and your fellow shareholders report the business's income, losses, deductions, and credits on your individual returns. The S corporation itself generally doesn't pay federal income tax, though it remains responsible for tax on certain built-in gains and passive income. Think of it as choosing to be taxed more like a partnership while maintaining your corporate legal structure.
When You’d Use Form 2553
Standard Filing Deadline
You file Form 2553 when you want S corporation tax treatment to begin. The standard deadline is no more than 2 months and 15 days after the beginning of the tax year you want the election to take effect, or anytime during the preceding tax year. For example, if you want S corporation status for a calendar year starting January 1, you must file by March 15 of that year (or anytime during the previous year).
Late or Amended Elections
If you miss this deadline, you're not necessarily out of luck. The IRS provides late election relief under Revenue Procedure 2013-30, but you must meet specific conditions. You'll need to demonstrate reasonable cause for missing the deadline—legitimate reasons might include relying on incorrect professional advice, serious illness, or natural disasters. You must file the late election within 3 years and 75 days of your intended effective date. Critically, both your corporation and all shareholders must have consistently reported income as if you were already an S corporation for the year in question and all subsequent years. When filing late, write "FILED PURSUANT TO REV. PROC. 2013-30" at the top of the form and explain your reasonable cause in Part I, Section I.
An exception to the 3-year-and-75-day rule exists for corporations that filed their first Form 1120-S on time and weren't notified by the IRS of problems within 6 months—though this rarely applies since processing systems now catch such issues quickly. If you don't qualify for automatic relief, you'll need to request a private letter ruling from the IRS, which involves fees and more complex procedures.
Key Rules You Need to Know
Eligibility Requirements
Not every business can elect S corporation status. Your corporation must meet all these requirements: it must be a domestic corporation (not foreign); have no more than 100 shareholders (family members can count as one shareholder); have only eligible shareholders—individuals, certain trusts, estates, and some exempt organizations are allowed, but partnerships, corporations, and nonresident aliens are not; maintain only one class of stock (differences in voting rights are okay, but all shares must have identical rights to distributions and liquidation proceeds); and avoid being an ineligible corporation type such as certain banks, insurance companies, or domestic international sales corporations.
Shareholder Consent Rules
Every single shareholder must consent to the election by signing either in column K of the form or on a separate consent statement. If someone owns stock as community property with a spouse, both spouses must consent. Tenants in common, joint tenants, and tenants by the entirety each need to sign individually.
Corporate Officer Signature Requirement
An authorized corporate officer—president, vice president, treasurer, assistant treasurer, chief accounting officer, or another officer with signing authority—must sign the form. Without this signature, the IRS won't consider your filing timely regardless of when you submitted it.
Step-by-Step Filing Process (High Level)
Step 1: Confirm Eligibility and Gather Information
Start by confirming your business meets all eligibility requirements before investing time in the form. Gather information from all shareholders including their names, addresses, Social Security numbers or employer identification numbers, stock ownership details, acquisition dates, and tax year-end dates.
Step 2: Complete Part I of Form 2553
Complete Part I of Form 2553 with your corporation's basic information: name, employer identification number, address, incorporation date and state, and the effective date of your election. Select your tax year—most S corporations use the calendar year, but if you need a fiscal year, you'll need to complete Part II and potentially demonstrate a business purpose or make a section 444 election.
Step 3: Obtain Shareholder Consents
List all shareholders in Part I, section J, with their required information. Each shareholder signs in column K, consenting to the election. If filing late, explain your reasonable cause in section I and mark "FILED PURSUANT TO REV. PROC. 2013-30" at the top of the first page.
Step 4: Sign and Submit the Form
Have an authorized corporate officer sign and date the form. Mail or fax the original form to the appropriate IRS Service Center based on your principal business location—addresses and fax numbers are listed in the instructions. Keep a copy for your records, especially if faxing.
Common Mistakes and How to Avoid Them
Missing the Filing Deadline
The most frequent error is missing the filing deadline. Many new corporations don't realize the 2-month-and-15-day window is calculated from when the tax year begins, not from incorporation. Mark this deadline clearly on your calendar as soon as you incorporate, and consider filing during the preceding tax year to avoid time pressure altogether.
Incomplete Shareholder Consent
Incomplete shareholder consent derails many elections. Every required shareholder must sign—no exceptions. This includes both spouses in community property states, all tenants in common, and proper representatives for trusts or estates. Before submitting, create a checklist of all required signatures and verify each one.
Missing the Corporate Officer’s Signature
Missing the corporate officer's signature is another surprisingly common mistake that renders your filing invalid. Designate who will sign before you begin, and double-check this signature exists before mailing.
Filing to the Wrong IRS Service Center
Filing to the wrong IRS Service Center causes delays and potential rejection. The IRS has changed these addresses periodically, so always verify the current mailing address on IRS.gov/Form2553 rather than relying on old instructions.
Lack of Proof of Filing
Many filers neglect to keep adequate proof of filing. If mailing, use certified mail with return receipt requested. If faxing, keep the confirmation page and the original form. Without proof, you'll struggle to demonstrate timely filing if questions arise later.
Weak Reasonable Cause Explanations
When requesting late election relief, businesses often provide vague or insufficient explanations of reasonable cause. Be specific about what happened, when you discovered the error, and what immediate corrective steps you took. Generic statements like "administrative oversight" rarely suffice.
What Happens After You File
IRS Review and Response Timeline
The IRS Service Center that receives your Form 2553 will review it for completeness and eligibility. You should generally receive a determination letter within 60 days indicating whether your election is accepted and its effective date. If the IRS needs additional information or finds problems, they'll contact the officer or representative you designated on the form.
If You Don’t Hear Back
If you don't receive any communication within 2 months of filing (or 5 months if you've made certain fiscal year elections), contact the IRS Service Center where you filed to verify receipt and status. Having your fax confirmation or certified mail receipt will prove invaluable.
After Acceptance or Rejection
If accepted, your S corporation status begins on the effective date specified. From that point forward, you'll file Form 1120-S (U.S. Income Tax Return for an S Corporation) instead of Form 1120. Each year, you'll also provide Schedule K-1 forms to all shareholders showing their share of income, deductions, and credits.
If rejected, the IRS will explain why and whether you can resubmit. Common rejection reasons include missing signatures, ineligible shareholders, or late filing without qualifying for relief. Depending on the issue, you may be able to correct and resubmit for a future tax year, even if you can't get relief for your originally intended effective date.
FAQs
Can I make the S corporation election effective for the current tax year if I just incorporated?
Yes, but timing is critical. If you incorporate and file Form 2553 within 2 months and 15 days of your incorporation date, the election can be effective for your first tax year. For example, if you incorporate on February 1 and file by April 16, you can have S corporation status from February 1 onward. If you miss this window, your election typically becomes effective the following tax year unless you qualify for late election relief.
What happens if one shareholder refuses to sign the consent?
You cannot proceed with the S corporation election. Every shareholder must consent—there's no majority rule or workaround. If a shareholder refuses, your options are to convince them to consent, buy out their shares and then file with remaining shareholders consenting, or continue operating as a C corporation. This unanimous consent requirement is why discussing the S election with all shareholders before taking action is essential.
How is the 2-month-and-15-day deadline calculated exactly?
Count 2 months forward from the first day of your tax year, then add 15 days. The 2-month period begins on the day your tax year starts and ends the day before the numerically corresponding day of the second following month. If there's no corresponding day, use the last day of that month. Then add 15 days. If the deadline falls on a weekend or holiday, it moves to the next business day.
If I'm forming an LLC, can I still file Form 2553?
Yes. A domestic LLC can elect to be treated as a corporation and then elect S corporation status. If you file Form 2553 without first filing Form 8832, the IRS generally treats Form 2553 as including the corporate classification election if you're otherwise eligible.
Do I need to file Form 2553 again every year?
No. Once the IRS accepts your S corporation election, it remains in effect until revoked, terminated, or invalidated. You only file Form 2553 once unless re-electing after a termination or revocation.
What counts as reasonable cause for a late election?
Reasonable cause means you exercised ordinary business care and prudence but still couldn't file on time due to circumstances beyond your control. Examples include serious illness, natural disasters, reliance on incorrect professional advice, or destruction of records. Forgetting the deadline or ignorance of the requirement generally doesn't qualify.
Can I revoke an S corporation election after filing?
Yes. You can revoke the election by submitting a revocation statement signed by shareholders holding more than 50 percent of the shares. Timing affects when the revocation becomes effective, and re-election is generally barred for five years without IRS consent.
