How to File an S Corp Late Election
To file an S corp late election, you need to follow specific steps to successfully be approved by the IRS. Here’s a step-by-step guide:
Determine Eligibility for Relief
Ensure your business meets the criteria for S corp late election relief under IRS Revenue Procedure 2013-30. This includes:
- The business intended and has operated as an S corp since the effective date entered on Form 2553.
- The corporation has reasonable cause for the failure to file timely. This could be as simple as saying “we didn’t know it needed to be filed.”
- The only reason the business is not an S corp is because the election was not filed timely. Basically, the business is eligible to be an S corp and meets all S corp criteria.
- The election is made within 3 years and 75 days of the effective date. There is one big caveat to this. All required S corporation tax returns and compliance requirements (such as payroll processing) have been filed during the retroactive period. For this reason, we don’t recommend filing an S corp election after November in the first year the business is intending to be taxed as an S corp (so all compliance requirements are met).
Prepare Form 2553 with the S Corp Late Election Statement Completed
- Once you’ve determined your business is eligible, complete Form 2553, Election by a Small Business Corporation. Instructions to complete a standard Form 2553 can be found at the following link – Click Here. Only two additional steps are required for an S corp late election.
- First, ensure the top of the completed Form 2553 states “Filed Pursuant to Rev. Proc. 2013-30”. If this isn’t specifically stated, the IRS will reject the request.
- Second, include a reasonable cause statement in Section I of Form 2553. See example below.
An example of a completed Form 2553 with S corp late election can be found at the following link – Click Here.
Final Steps
Sample Reasonable Cause Statement
Here is a sample statement to include with your late election request:
FILED PURSUANT TO REV. PROC. 2013-30. THIS FORM IS BEING FILED LATE DUE TO REASONABLE CAUSE. THE COMPANY’S PRESIDENT WAS NOT AWARE THAT THE ELECTION MUST BE FILED WITHIN THE 2.5 MONTH TIMEFRAME. UPON LEARNING THAT AN ELECTION NEEDED TO BE MADE, THE COMPANY IS FILING FORM 2553, AND IS SEEKING LATE ELECTION RELIEF UNDER REV. PROC. 2013-30. THE COMPANY HAS QUALIFIED AS AN S CORP AND OPERATED AND INTENDED TO OPERATE AS AN S CORPORATION SINCE INSERT EFFECTIVE DATE (MM-DD-YYYY). THE REQUESTING ENTITY HAS NOT FILED A FEDERAL TAX OR INFORMATION RETURN FOR THE FIRST YEAR IN WHICH THE ELECTION WAS INTENDED TO BE EFFECTIVE BECAUSE THE DUE DATE HAS NOT PASSED FOR THAT YEAR’S FEDERAL TAX OR INFORMATION RETURN. THIS REQUEST IS BEING MADE WITHIN THE 3 YEAR AND 75 DAY TIMEFRAME.
Want to Know if an S Corporation is Right for Your Business?
Learn More
Check out our other posts and subscribe to our YouTube page for more information.
About the Author
Brett Rosenstein
Founder of S Corp Advantages
Certified Public Accountant
Brett is the founder and president of S Corp Advantages where he specializes in S corporations. He helps business owners understand if an S corporation election is right for their business. He also keeps current S corps in compliance with IRS regulations.
Brett received a Bachelor of Science in Business Administration from The Ohio State University. He is also a Certified Public Accountant.
When Brett is not working, he is running, biking, spending time with his wife and daughter, or trying new pizza places around Chicago.
Work with Us
S Corp Tax Filings
pricing starts at-
1 State Filing Included
-
E-Filing
-
Quarterly Estimate Vouchers
Monthly Bookkeeping
pricing starts at-
Capture All Deductions
-
Balance Sheet and P&L
-
Real-Time Financials
S Corp Election Filing
pricing starts at-
Professionally Prepared
-
Filing Included
-
Late Filing