The IRS 2553 form is a crucial document that allows eligible small businesses to elect to be taxed as an S corporation. This election can provide significant tax benefits, including the avoidance of double taxation on corporate income. If you're considering this option for your business, take the first step by filling out the form; click the button below to get started.
For small business owners looking to optimize their tax situation, the IRS Form 2553 plays a pivotal role in electing S corporation status. This form allows eligible corporations and limited liability companies (LLCs) to be taxed as S corporations, which can lead to significant tax benefits. By making this election, businesses can avoid double taxation on their income, as profits and losses pass through directly to shareholders' personal tax returns. However, the process of completing and submitting Form 2553 requires careful attention to detail and adherence to specific deadlines. To qualify, the business must meet certain criteria, such as having no more than 100 shareholders and only one class of stock. Additionally, the form must be filed within a designated time frame, typically within two months and 15 days of the start of the tax year. Understanding the implications of this election is crucial, as it can affect not only tax liabilities but also the overall structure and operation of the business.
Note: Form 2553 begins on the next page.
Where To File Form 2553 after 6/17/19
If the corporation’s principal business, office,
Use the following address
or agency is located in
or fax number
Connecticut, Delaware, District of Columbia,
Department of the Treasury
Georgia, Illinois, Indiana, Kentucky, Maine,
Internal Revenue Service
Maryland, Massachusetts, Michigan, New
Kansas City, MO 64999
Hampshire, New Jersey, New York, North Carolina,
Ohio, Pennsylvania, Rhode Island, South Carolina,
Tennessee, Vermont, Virginia, West Virginia,
Fax # 855-887-7734
Wisconsin
Alabama, Alaska, Arizona, Arkansas, California,
Colorado, Florida, Hawaii, Idaho, Iowa, Kansas,
Louisiana, Minnesota, Mississippi, Missouri,
Ogden, UT 84201
Montana, Nebraska, Nevada, New Mexico, North
Dakota, Oklahoma, Oregon, South Dakota, Texas,
Utah, Washington, Wyoming
Fax # 855-214-7520
Form 2553
(Rev. December 2017)
Department of the Treasury Internal Revenue Service
Election by a Small Business Corporation
(Under section 1362 of the Internal Revenue Code)
(Including a late election filed pursuant to Rev. Proc. 2013-30)
▶You can fax this form to the IRS. See separate instructions.
▶Go to www.irs.gov/Form2553 for instructions and the latest information.
OMB No. 1545-0123
Note: This election to be an S corporation can be accepted only if all the tests are met under Who May Elect in the instructions, all shareholders have signed the consent statement, an officer has signed below, and the exact name and address of the corporation (entity) and other required form information have been provided.
Part I
Election Information
Name (see instructions)
A Employer identification number
Type
Number, street, and room or suite no. If a P.O. box, see instructions.
B Date incorporated
or
Print
City or town, state or province, country, and ZIP or foreign postal code
C State of incorporation
D
Check
the applicable box(es) if the corporation (entity), after applying for the EIN shown in A above, changed its
name or
address
EElection is to be effective for tax year beginning (month, day, year) (see instructions) . . . . . . ▶
Caution: A corporation (entity) making the election for its first tax year in existence will usually enter the beginning date of a short tax year that begins on a date other than January 1.
FSelected tax year:
(1) Calendar year
(2) Fiscal year ending (month and day) ▶
(3) 52-53-week year ending with reference to the month of December
(4) 52-53-week year ending with reference to the month of ▶
If box (2) or (4) is checked, complete Part II.
GIf more than 100 shareholders are listed for item J (see page 2), check this box if treating members of a family as one shareholder results in no more than 100 shareholders (see test 2 under Who May Elect in the instructions) ▶
HName and title of officer or legal representative whom the IRS may call for more information
Telephone number of officer or legal representative
IIf this S corporation election is being filed late, I declare I had reasonable cause for not filing Form 2553 timely. If this late election is being made by an entity eligible to elect to be treated as a corporation, I declare I also had reasonable cause for not filing an entity classification election timely and the representations listed in Part IV are true. See below for my explanation of the reasons the election or elections were not made on time and a description of my diligent actions to correct the mistake upon its discovery. See instructions.
Under penalties of perjury, I declare that I have examined this election, including accompanying documents, and, to the best of my
Sign knowledge and belief, the election contains all the relevant facts relating to the election, and such facts are true, correct, and complete.
Here
▲Signature of officer
Title
Date
For Paperwork Reduction Act Notice, see separate instructions.
Cat. No. 18629R
Form 2553 (Rev. 12-2017)
Page 2
Name
Employer identification number
Part I Election Information (continued) Note: If you need more rows, use additional copies of page 2.
J
Name and address of each
shareholder or former shareholder required to consent to the election.
(see instructions)
K
Shareholder’s Consent Statement
Under penalties of perjury, I declare that I consent to the election of the above-named corporation (entity) to be an S corporation under section 1362(a) and that I have examined this consent statement, including accompanying documents, and, to the best of my knowledge and belief, the election contains all the relevant facts relating to the election, and such facts are true, correct, and complete. I understand my consent is binding and may not be withdrawn after the corporation (entity) has made a valid election. If seeking relief for a late filed election, I also declare under penalties of perjury that I have reported my income on all affected returns consistent with the S corporation election for the year for which the election should have been filed (see beginning date entered on line E) and for all subsequent years.
Signature
L
Stock owned or
percentage of ownership
Number of
shares or
percentage
Date(s)
of ownership
acquired
M
Social security
number or
N
employer
Shareholder’s
identification
tax year ends
number (see
(month and
instructions)
day)
Page 3
Part II
Selection of Fiscal Tax Year (see instructions)
Note: All corporations using this part must complete item O and item P, Q, or R.
O Check the applicable box to indicate whether the corporation is:
1.
A new corporation adopting the tax year entered in item F, Part I.
2.
An existing corporation retaining the tax year entered in item F, Part I.
3.
An existing corporation changing to the tax year entered in item F, Part I.
PComplete item P if the corporation is using the automatic approval provisions of Rev. Proc. 2006-46, 2006-45 I.R.B. 859, to request (1) a natural business year (as defined in section 5.07 of Rev. Proc. 2006-46) or (2) a year that satisfies the ownership tax year test (as defined in section 5.08 of Rev. Proc. 2006-46). Check the applicable box below to indicate the representation statement the corporation is making.
1. Natural Business Year ▶
I represent that the corporation is adopting, retaining, or changing to a tax year that qualifies
as its natural business year (as defined in section 5.07 of Rev. Proc. 2006-46) and has attached a statement showing separately for each month the gross receipts for the most recent 47 months. See instructions. I also represent that the corporation is not precluded by section 4.02 of Rev. Proc. 2006-46 from obtaining automatic approval of such adoption, retention, or change in tax year.
2. Ownership Tax Year ▶
I represent that shareholders (as described in section 5.08 of Rev. Proc. 2006-46) holding more
than half of the shares of the stock (as of the first day of the tax year to which the request relates) of the corporation have the same tax year or are concurrently changing to the tax year that the corporation adopts, retains, or changes to per item F, Part I, and that such tax year satisfies the requirement of section 4.01(3) of Rev. Proc. 2006-46. I also represent that the corporation is not precluded by section 4.02 of Rev. Proc. 2006-46 from obtaining automatic approval of such adoption, retention, or change in tax year.
Note: If you do not use item P and the corporation wants a fiscal tax year, complete either item Q or R below. Item Q is used to request a fiscal tax year based on a business purpose and to make a back-up section 444 election. Item R is used to make a regular section 444 election.
QBusiness Purpose—To request a fiscal tax year based on a business purpose, check box Q1. See instructions for details including payment of a user fee. You may also check box Q2 and/or box Q3.
1. Check here ▶ if the fiscal year entered in item F, Part I, is requested under the prior approval provisions of Rev. Proc. 2002-39, 2002-22 I.R.B. 1046. Attach to Form 2553 a statement describing the relevant facts and circumstances and, if applicable, the gross receipts from sales and services necessary to establish a business purpose. See the instructions for details regarding the gross receipts from sales and services. If the IRS proposes to disapprove the requested fiscal year, do you want a conference with the IRS National Office?
Yes
No
2.Check here ▶ to show that the corporation intends to make a back-up section 444 election in the event the corporation’s business purpose request is not approved by the IRS. See instructions for more information.
3.Check here ▶ to show that the corporation agrees to adopt or change to a tax year ending December 31 if necessary for the IRS to accept this election for S corporation status in the event (1) the corporation’s business purpose request is not approved and the corporation makes a back-up section 444 election, but is ultimately not qualified to make a section 444 election, or (2) the corporation’s business purpose request is not approved and the corporation did not make a back-up section 444 election.
RSection 444 Election—To make a section 444 election, check box R1. You may also check box R2.
1.Check here ▶ to show that the corporation will make, if qualified, a section 444 election to have the fiscal tax year shown in item F, Part I. To make the election, you must complete Form 8716, Election To Have a Tax Year Other Than a Required Tax Year, and either attach it to Form 2553 or file it separately.
2.Check here ▶ to show that the corporation agrees to adopt or change to a tax year ending December 31 if necessary for the IRS to accept this election for S corporation status in the event the corporation is ultimately not qualified to make a section 444 election.
Page 4
Part III Qualified Subchapter S Trust (QSST) Election Under Section 1361(d)(2)* Note: If you are making more than
one QSST election, use additional copies of page 4.
Income beneficiary’s name and address
Social security number
Trust’s name and address
Date on which stock of the corporation was transferred to the trust (month, day, year) . . . . . . . . ▶
In order for the trust named above to be a QSST and thus a qualifying shareholder of the S corporation for which this Form 2553 is filed, I hereby make the election under section 1361(d)(2). Under penalties of perjury, I certify that the trust meets the definitional requirements of section 1361(d)(3) and that all other information provided in Part III is true, correct, and complete.
Signature of income beneficiary or signature and title of legal representative or other qualified person making the election
*Use Part III to make the QSST election only if stock of the corporation has been transferred to the trust on or before the date on which the corporation makes its election to be an S corporation. The QSST election must be made and filed separately if stock of the corporation is transferred to the trust after the date on which the corporation makes the S election.
Part IV Late Corporate Classification Election Representations (see instructions)
If a late entity classification election was intended to be effective on the same date that the S corporation election was intended to be effective, relief for a late S corporation election must also include the following representations.
1The requesting entity is an eligible entity as defined in Regulations section 301.7701-3(a);
2The requesting entity intended to be classified as a corporation as of the effective date of the S corporation status;
3The requesting entity fails to qualify as a corporation solely because Form 8832, Entity Classification Election, was not timely filed under Regulations section 301.7701-3(c)(1)(i), or Form 8832 was not deemed to have been filed under Regulations section 301.7701-3(c)(1)(v)(C);
4The requesting entity fails to qualify as an S corporation on the effective date of the S corporation status solely because the S corporation election was not timely filed pursuant to section 1362(b); and
5a The requesting entity timely filed all required federal tax returns and information returns consistent with its requested classification as an S corporation for all of the years the entity intended to be an S corporation and no inconsistent tax or information returns have been filed by or with respect to the entity during any of the tax years, or
bThe 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.
Filling out the IRS Form 2553 is an important step for certain small businesses wishing to elect S corporation status. After completing the form, it must be submitted to the IRS to ensure the desired tax treatment for your business entity.
What is the IRS Form 2553?
The IRS Form 2553 is a document that allows a corporation to elect to be taxed as an S corporation. This election can provide significant tax benefits, including the avoidance of double taxation on corporate income. By filing this form, a corporation can pass its income, losses, deductions, and credits directly to its shareholders, who then report these items on their personal tax returns.
Who can file Form 2553?
Generally, any domestic corporation can file Form 2553, provided it meets specific requirements. The corporation must have no more than 100 shareholders, all shareholders must be individuals, certain trusts, or estates, and the corporation must have only one class of stock. Additionally, all shareholders must consent to the S corporation election.
When should Form 2553 be filed?
Form 2553 should be filed within two months and 15 days after the beginning of the tax year in which the S corporation election is to take effect. For a corporation that wishes to be treated as an S corporation for the current tax year, it is crucial to file on time. If the deadline is missed, the corporation may have to wait until the next tax year to make the election.
How do I file Form 2553?
To file Form 2553, you must complete the form and submit it to the IRS. The form can be filed electronically or by mail, depending on your preference. Ensure that all required signatures are obtained from shareholders before submission. It is advisable to keep a copy of the filed form for your records.
What information is required on Form 2553?
Form 2553 requires various pieces of information, including the corporation's name, address, and Employer Identification Number (EIN). You will also need to provide details about the corporation's shareholders, including their names, addresses, and consent signatures. Additionally, you must indicate the tax year for which the election is being made.
What happens if I miss the filing deadline for Form 2553?
If you miss the filing deadline, the corporation will not be treated as an S corporation for that tax year. However, the IRS may grant relief if you can demonstrate that the failure to file on time was due to reasonable cause. In such cases, you may need to provide a written explanation to the IRS, along with a late-filed Form 2553.
Can I revoke my S corporation status after filing Form 2553?
Yes, a corporation can revoke its S corporation status. This can be done by filing a statement with the IRS, signed by shareholders holding more than 50% of the shares. The revocation will be effective on the date specified in the statement or, if no date is provided, on the date the statement is filed.
Are there any ongoing requirements after electing S corporation status?
Yes, after electing S corporation status, the corporation must adhere to certain ongoing requirements. These include maintaining eligibility criteria, filing an annual tax return using Form 1120S, and ensuring that all shareholders are informed of their tax obligations. Additionally, the corporation must avoid actions that could jeopardize its S corporation status.
Where can I find Form 2553 and related instructions?
You can find Form 2553 and its instructions on the IRS website. The form is available for download in PDF format. It is essential to review the instructions carefully to ensure that you complete the form correctly and understand the requirements for filing.
Filing the IRS Form 2553 is a crucial step for small business owners who wish to elect S Corporation status. However, many individuals make common mistakes that can lead to delays or even denial of their election. Understanding these pitfalls can help ensure a smoother process.
One frequent error occurs when taxpayers fail to file the form on time. The IRS requires that Form 2553 be submitted within 75 days of the beginning of the tax year for which the S Corporation election is to take effect. Missing this deadline can result in the loss of S Corporation status for that tax year. It is essential to keep track of the submission dates to avoid this mistake.
Another mistake is not obtaining the necessary signatures. All shareholders must sign the form to validate the election. If any signatures are missing, the IRS may reject the application. Ensuring that all shareholders are on board and have signed the form is critical.
Incorrect information on the form can also lead to complications. Common errors include misspelling names, providing incorrect Social Security numbers, or listing the wrong address. Such inaccuracies can create confusion and may result in processing delays. Double-checking all entries for accuracy before submission can help prevent this issue.
Many applicants overlook the requirement to provide the correct tax year. The IRS allows for different fiscal years, but the form must reflect the appropriate year for the S Corporation election. Failing to specify the correct tax year can result in automatic denial of the election.
Another mistake is not including the required statement regarding the number of shareholders. The IRS limits S Corporations to 100 shareholders. If the form does not clearly indicate the number of shareholders or exceeds this limit, the election will be denied. It’s important to provide accurate and complete information about shareholders.
Some individuals also forget to attach the necessary supporting documents. If the corporation has previously filed as a C Corporation, it may need to provide additional documentation. Failing to include these documents can cause delays or rejections. Always check the requirements for any additional paperwork that may be needed.
Lastly, many filers neglect to keep a copy of the submitted form. Having a copy is essential for future reference and can help resolve any issues that may arise later. It is advisable to retain a copy of all submitted forms and correspondence with the IRS for your records.
When filing the IRS Form 2553 to elect S Corporation status, several other forms and documents may be necessary to ensure compliance with tax regulations. Each of these documents serves a specific purpose and can help streamline the process of establishing and maintaining your business entity's status. Below is a list of commonly used forms and documents that you might encounter.
Understanding these forms and documents is vital for anyone considering the S Corporation election. Each plays a role in ensuring that your business operates smoothly and remains compliant with federal and state regulations. Being well-prepared will help you focus on growing your business while minimizing potential legal issues.
The IRS Form 2553 is essential for businesses electing to be treated as an S Corporation. Several other documents serve similar purposes in different contexts. Here’s a list of six documents that share similarities with Form 2553:
When filling out the IRS 2553 form, it's important to follow certain guidelines to ensure your application is processed smoothly. Here are nine key do's and don'ts to keep in mind:
Following these guidelines can help you navigate the process more effectively and avoid common pitfalls. Always double-check your work before submission to ensure everything is in order.
The IRS Form 2553 is an important document for small businesses that wish to elect S Corporation status. However, several misconceptions about this form can lead to confusion. Below are four common misconceptions along with clarifications.
Many people believe that Form 2553 needs to be submitted annually. In reality, once a business elects S Corporation status, it does not need to refile the form each year unless it revokes its S Corporation election or undergoes a significant change, such as a merger.
There is a belief that only specific business types, such as corporations, can file this form. In fact, any eligible domestic corporation can file Form 2553, provided it meets the IRS requirements for S Corporation status.
Some individuals think that submitting Form 2553 automatically grants S Corporation status. However, the IRS must approve the election. If the form is incomplete or if the business does not meet the eligibility criteria, the election may be denied.
It is often assumed that businesses can file Form 2553 at any time. This is incorrect. The form must be filed within a specific timeframe, generally within 75 days of the start of the tax year in which the business wants to be recognized as an S Corporation.
The IRS Form 2553 is essential for small businesses seeking S Corporation status. Here are key takeaways to consider when filling out and using this form:
Understanding these key points can help ensure a smooth process when electing S Corporation status through IRS Form 2553.