Filing Instructions for IRS Form 2553

IRS Form 2553, Election by a Small Business Corporation, is the document a corporation or other eligible entity files to be treated as an S corporation for federal tax purposes. This changes the default tax classification from a C corporation, where profits are taxed at the corporate level and again when distributed to shareholders, to a pass-through entity. Under the S corporation structure, profits, losses, deductions, and credits pass directly to the shareholders to be reported on their individual tax returns.

S Corporation Eligibility and Election Deadlines

To qualify for S corporation status, a business must satisfy several requirements. The entity must be a domestic corporation, meaning it is organized in the United States. It must also meet the following criteria:

• It can have no more than 100 shareholders.
• All shareholders must be allowable, which includes individuals, certain trusts, and estates; partnerships and other corporations are not permitted as shareholders.
• Non-resident alien shareholders are not permitted.
• The corporation may only have one class of stock, ensuring all shares confer identical rights to distribution and liquidation proceeds.

For the election to take effect in the current tax year, the form must be filed no later than two months and 15 days after the beginning of that tax year. For example, if a calendar-year corporation wants the election to be effective for 2025, it must file Form 2553 by March 15, 2025. A corporation can also file the form at any time during the preceding tax year.

For a newly formed corporation, the two-month and 15-day period begins on the earliest date the corporation first had shareholders, acquired assets, or began doing business. If this deadline is missed, the election will generally not become effective until the following tax year. The IRS does provide procedures for late election relief if the company can show it had reasonable cause for the failure to file on time.

Information and Documentation for Form 2553

Before completing Form 2553, gather the corporation’s full legal name, mailing address, and its Employer Identification Number (EIN). If the corporation does not have an EIN, it must apply for one. If the number is not received by the filing deadline, you can write “Applied for” in the designated box on the form.

You must also have the corporation’s date and state of incorporation. The form requires a complete list of all shareholders, including their full names, addresses, and Social Security Numbers or other Taxpayer Identification Numbers. For each shareholder, you must provide the number of shares they own and the date they acquired them.

Completing Form 2553 Part by Part

Part I: Election Information

In Part I, you must specify the exact date the S corporation election is to become effective. This section also contains the shareholder consent statement. Every individual who is a shareholder at the time of the election must sign and date the form, explicitly consenting to the S corporation status and providing their stock ownership details.

Part II: Selection of Fiscal Tax Year

This part is only completed if the corporation is selecting a tax year other than a calendar year ending December 31. The IRS provides several acceptable reasons for adopting a fiscal year, such as it being a natural business year or a year elected under section 444 of the Internal Revenue Code. You must select the appropriate box that corresponds to the basis for your fiscal year claim.

Part III: Qualified Subchapter S Trust (QSST) Election

Part III applies only if a trust is a shareholder and must make a Qualified Subchapter S Trust (QSST) election to be eligible. The trust’s income beneficiary completes this section with the trust’s and beneficiary’s information. Most filers can skip this part.

Part IV: Late Corporate Classification Election Representations

If you are filing Form 2553 after the deadline, Part IV must be completed to request late election relief. In this section, you must state that the entity intended to be classified as an S corporation by the effective date and that the failure to file on time was inadvertent. A statement explaining the reasonable cause for the late filing must be attached to the form.

Filing the Form and Next Steps

The form can be filed either by mail or by fax. The mailing address depends on the state where the corporation’s principal business is located, and the Form 2553 instructions provide the specific addresses.

If the election is accepted, the corporation will receive a confirmation notice from the IRS, typically within 60 days of filing. If you do not receive a response within this timeframe, you should contact the IRS Business and Specialty Tax Line to inquire about the status. Keep a copy of the filed Form 2553 and proof of mailing or a fax confirmation for your records.