Form 2553 (2013) S Corporation Election Guide

Form 2553 allows an eligible business entity to elect S corporation tax treatment for federal income tax purposes. For the 2013 tax year, this S-election is governed by IRS Form 2553 instructions and late-filing relief procedures under Revenue Procedure 2013-30. To avoid rejection codes, penalties, or delayed processing, ensure proper filing, shareholder consent, and compliance with entity classification rules.

Step-by-Step Form 2553 Filing Process (2013)

1. Step 1: Verify Business Entity Eligibility and Formation Details

   Confirm the business is a domestic corporation or an LLC electing corporate status under check-the-box rules. The entity formation and incorporation dates must precede the intended

   S-election effective date.

2. Step 2: Confirm S Corporation Structural Requirements

   Ensure the entity meets all Subchapter S requirements, including having one class of stock and only permitted shareholders. Ineligible ownership or multiple stock classes will invalidate the

   S-election.

3. Step 3: Review Shareholder Count, Ownership, and Trust Rules

   Verify the corporation has no more than 100 shareholders as of the effective date. Confirm ownership percentages, acquisition dates, and that any trusts qualify as QSSTs or ESBTs under federal rules.

4. Step 4: Obtain and Document Shareholder’s Consent Statement

   Each shareholder owning stock on the effective date must provide written consent. Consent is recorded in Part I of Form 2553 or attached separately with required identifying information.

5. Step 5: Determine the Correct S-Election Effective Date

   File the election no later than two months and 15 days after the tax year begins. Calendar-year entities must generally file by March 15 for same-year effectiveness.

6. Step 6: Apply Late Election Relief When Filing After the Deadline

   Late filings must include a reasonable cause statement. Revenue Procedure 2013-30 provides retroactive relief if filed within 3 years and 75 days, and the income was consistently reported as

   S corporation income.

7. Step 7: Complete Part I of IRS Form 2553 Accurately

   Enter the legal business name, Employer Identification Number, address, state of incorporation, fiscal year, and effective date. An authorized officer must sign the penalty of perjury declaration.

8. Step 8: Complete Shareholder Information and Trust Elections

   List all shareholders with ownership details and identification numbers. Use Part III for QSST elections, and submit separate ESBT election statements with trustee consent when required.

9. Step 9: Review Entity Classification Elections and Related Forms

   Confirm whether Form 8832 was required before filing Form 2553. LLCs that fail to elect corporate classification properly may have their S-election rejected.

10. Step 10: Submit Form 2553 Using Approved IRS Submission Methods

    File Form 2553 by mail or fax with the applicable IRS service center based on state location.

    Retain proof of submission, as online filing and e-signatures are limited.

11. Step 11: Monitor IRS Processing and Acceptance Notices

    Track IRS correspondence after filing. Approved elections are confirmed through CP261 or

    CP264 notices, while rejected elections require prompt correction in accordance with IRS instructions.

12. Step 12: Address Federal and State Tax Compliance After Election

    Once approved, the corporation must file Form 1120-S annually and issue Schedule K-1s to shareholders. Many states require separate S-election filings or conformity notices.

13. Step 13: Review Payroll and Employment Tax Obligations

    S corporations paying wages must comply with reasonable compensation rules and employment tax requirements. Improper wage treatment can trigger penalties, audit notices, or payroll-related enforcement actions.

• Full IRS transcript retrieval (Wage & Income + Account)
• Professional tax form review
• Preparation & filing support
• Tax relief options if you owe the IRS

14. Step 14: Maintain Ongoing Records and Audit Readiness

    Retain copies of Form 2553, consent statements, acceptance notices, and supporting documents. Complete records support compliance, simplify audits, and assist tax professionals with future filings.

    If you’re missing tax documents or want to ensure the numbers you enter match IRS records, we can help.