How to File Form 2553 Online for S Corporation Election

Electing to file as an S Corporation can provide tax advantages for small businesses, primarily through pass-through taxation. This allows income and losses to be reported on shareholders’ personal tax returns, potentially reducing overall tax liability.

S Corporation Criteria

To qualify for S Corporation status, a business must meet specific IRS requirements. The corporation must be domestic, incorporated within the United States, and have no more than 100 shareholders. Eligible shareholders include individuals, certain trusts, and estates, but not partnerships, corporations, or non-resident aliens. This ensures the corporation remains closely held, aligning with the IRS’s intent to support small businesses.

The corporation can only issue one class of stock, ensuring all shareholders have equal distribution and liquidation rights, though voting rights may differ. Certain entities, such as financial institutions, insurance companies, and domestic international sales corporations, are not eligible.

Required Documentation

Electing S Corporation status requires submitting Form 2553 with accurate corporate information, including the corporation’s name, address, and Employer Identification Number (EIN). The form also requires details about the fiscal year, which must comply with IRS standards. Shareholder consent is mandatory, with each shareholder signing and dating the form to confirm their agreement.

The IRS may request additional documents, such as articles of incorporation, bylaws, or shareholder agreements, to verify eligibility and compliance.

Filing Deadlines

Form 2553 must be filed within two months and 15 days of the start of the tax year the corporation intends to elect S Corporation status. For example, to elect S status for the calendar year beginning January 1, 2025, the deadline is March 15, 2025. Missing this deadline generally delays the election until the following tax year.

However, the IRS allows relief for late elections under Revenue Procedure 2013-30 if the corporation can show reasonable cause for the delay and has acted diligently. This involves filing Form 2553 with an explanation for the delay and statements from shareholders confirming they reported income consistent with S Corporation status since the intended effective date.

Online Submission Steps

To submit Form 2553 online, businesses should access the IRS website to download the latest version. The completed form should be saved as a PDF, the preferred format for electronic submissions. A reliable PDF editor can assist in filling out the form digitally. Ensuring all shareholder signatures are included is critical to avoid invalidation.

Confirming Election Status

After submitting Form 2553, businesses should confirm the election’s acceptance to ensure proper tax treatment. The IRS typically provides written acknowledgment within 60 days, specifying the effective date. This document is important for audits or future tax filings.

If no acknowledgment letter is received, businesses should contact the IRS Business and Specialty Tax Line at 800-829-4933. Having the corporation’s EIN, submission date, and a copy of the filed Form 2553 on hand will expedite the inquiry. If the election is rejected, the IRS provides an explanation, allowing the corporation to address any issues or appeal if necessary.