Form 2553 (2012): Small Business Election Checklist
IRS Form 2553 allows an eligible domestic corporation or limited liability company to elect S corporation tax status with the Internal Revenue Service. This checklist supports accurate filing during tax season and proper compliance with federal and applicable state tax rules.
Confirm S Corporation Eligibility Requirements
Your business structure must qualify as a domestic C corporation or an eligible limited liability company that is considered an entity. The business must have no more than 100 shareholders, all of whom must be U.S. citizens or qualifying residents, estates, or certain trusts. The entity must issue only one class of stock and cannot be an ineligible business under corporate tax rules, such as certain financial institutions or insurance companies.
Understand the S-Corp Election and Pass-Through Tax
Treatment
An approved S-Corp Election allows the business to be treated as a pass-through entity for federal tax purposes. Income, losses, deductions, and tax credits flow through to shareholders and are reported on Schedule K-1 rather than being taxed at the corporate tax rate. This pass-through tax treatment may reduce overall tax liability compared to C corporation taxation.
Determine Your Filing Deadline and Election Type
The filing deadline depends on the intended effective date of the election. For calendar-year entities, IRS Form 2553 must generally be filed no later than 2 months and 15 days after the beginning of the tax year, which is March 15. Fiscal tax year elections follow different deadlines based on the first business day of the tax year.
Complete Part I: Corporate Information Section
Enter the legal business name, employer identification number, and address exactly as shown on prior tax return filings. Indicate the state of incorporation and confirm whether the entity has changed its name or address since formation. Accuracy in this section is critical for return preparation software and IRS processing.
Select the Correct Effective Date
The effective date determines when S corporation tax treatment begins for federal income tax purposes. Timely elections usually take effect on the first day of the tax year, while late elections approved under relief procedures may have adjusted effective dates. The effective date impacts net taxable income reporting and shareholder tax obligations.
Complete Part II: Shareholder Consent Requirements
All shareholders who owned stock during the relevant period must consent to the S corporation election. Each shareholder must sign and date the form and provide their Social Security number or employer identification number. Consent ensures agreement to pass-through tax treatment and reporting via Form K-1.
Step-by-Step Filing Instructions
Step 1: Verify All Eligibility Requirements
Confirm the entity meets Internal Revenue Code Section 1361 requirements and is not subject to disqualification under corporate taxes or franchise tax rules. Verify shareholder eligibility before submitting IRS Form 2553.
Step 2: Gather Required Shareholder Information
Collect complete ownership details, including the number of shares, acquisition dates, and identifying information. Accurate records ensure proper allocation of income and losses reported to shareholders.
Step 3: Obtain All Necessary Shareholder Consents
Ensure all required shareholders sign the consent section or attached statements. Unsigned or incomplete consents may delay processing or cause rejection by the Internal Revenue Service.
Step 4: Complete the Corporate Officer Signature Section
An authorized officer must sign and date the form to certify the election. Unsigned forms are considered invalid and will not be processed.
- Reasonable cause explanation: Provide a clear explanation of why the election was
- Consistent reporting requirement: Shareholders must have reported income using
- No filing fee requirement: There is no user fee for standard late S-Corp Election
- Full IRS transcript retrieval (Wage & Income + Account)
- Professional tax form review
- Preparation & filing support
- Tax relief options if you owe the IRS
Step 5: Submit Form 2553 to the Correct IRS Location
Submit the completed form by mail or fax to the service center listed in the current Form 2553 instructions. Retain confirmation of submission for your permanent tax records.
Late Election Relief Under Revenue Procedure 2013-30
Businesses that miss the original deadline may request relief if they file within three years and
75 days of the intended effective date. The company must show reasonable cause and demonstrate consistent income reporting as an S corporation. late and describe corrective actions taken promptly upon discovery. personal tax rates consistent with S corporation treatment for all affected years. requests unless requesting a fiscal tax year approval.
After Filing Form 2553
The IRS typically issues a written determination within approximately 60 days. If confirmation is not received, contact the Internal Revenue Service using the number listed in the instructions.
Retain approval notices with other tax practice documentation for future reference.
Ongoing Tax Reporting After Election Approval
Once approved, the S corporation must file Form 1120-S annually instead of a C corporation tax return. Shareholders receive Schedule K-1 to report income, losses, charitable contributions, and start-up losses on their individual tax returns. Proper handling of payroll tax, Medicare taxes, and estimated payment obligations is required to remain compliant.
State and Arizona-Specific Tax Considerations
S corporation status does not eliminate state and local taxes. Arizona businesses must comply with Arizona taxes, including the Arizona small business income tax and the Arizona small business gross income rules, as outlined in the Arizona Revised Statutes. Certain provisions, including Senate Bill 1783, may affect filing obligations, payment plans, or the ability to request a payment plan through the Arizona Department of Revenue.
If you’re missing tax documents or want to ensure the numbers you enter match IRS records, we can help.
