How Long Does It Take to Process Form 2553?
Learn how long Form 2553 processing takes, factors that may cause delays, and how to check your status or follow up with the IRS efficiently.
Form 2553 allows businesses to elect S corporation status with the IRS, offering tax benefits. Processing times vary, and delays can affect a company’s ability to use these benefits in a given tax year. Understanding the timeline and potential obstacles helps businesses plan accordingly.
Filing Method and Processing Duration
Submission method impacts processing speed. Businesses can file by fax or mail, with fax typically faster. The IRS processes faxed submissions within 60 days, while mailed forms often take 90 days or more.
Timing also matters. Form 2553 must be filed within two months and 15 days after the start of the intended tax year. Early submissions are processed ahead of the deadline, while those filed closer to the cutoff may experience delays due to higher volume.
Potential Reasons for Processing Delays
Errors or omissions slow processing. The IRS requires accurate details, including the corporation’s name, Employer Identification Number (EIN), and election date. A common mistake is missing shareholder signatures, which are required for approval. Incomplete or incorrect forms prompt IRS notices requesting corrections, adding weeks or months to the timeline.
Eligibility issues also lead to delays. S corporations must meet IRS requirements, including a shareholder limit of 100, ownership restricted to U.S. individuals and certain trusts or estates, and a single class of stock. If a business does not qualify, the election is rejected. Some may need to restructure or seek relief under Revenue Procedure 2013-30, further extending the process.
IRS backlogs contribute to delays. Processing times fluctuate based on staffing, seasonal workload increases, and administrative challenges. Tax season and fiscal year-end see higher submission volumes, slowing response times. Government shutdowns and budget constraints have historically affected IRS operations, leading to longer wait times.
Status Check Options
The IRS does not offer online tracking for Form 2553, but businesses can check status by calling the IRS Business & Specialty Tax Line at 800-829-4933. Representatives can confirm receipt and identify issues. Having the EIN and submission date ready helps expedite inquiries. Wait times vary, especially during peak tax periods, so calling early in the day may reduce hold times.
For written confirmation, businesses can send a status request by mail to the IRS office where the form was filed. This takes longer but provides a paper trail in case of discrepancies. Including a copy of the original submission may help speed up the process.
Receiving Confirmation or Follow-Up
Once processed, the IRS sends a determination letter confirming whether the S corporation election is approved. This document states the effective date and serves as proof of tax status. If the letter does not arrive within the expected timeframe, businesses can request a duplicate by submitting Form 4506, Request for Copy of Tax Return, or by calling the IRS.
If the election is denied, the letter explains why. Common reasons include late filing without a reasonable cause statement under Revenue Procedure 2013-30 or failure to meet shareholder eligibility requirements. Businesses that believe the denial was issued in error can request reconsideration by providing additional documentation or legal arguments. Tax professionals often assist in drafting these responses to ensure compliance with IRS regulations.