Guide · March 6, 2025
S Corporation Election: How to File Form 2553 on Time
S corporation election is made on IRS Form 2553, and it must be filed no more than 2 months and 15 days after the start of the tax year the election is to take effect. For a calendar-year company that already files as a C corporation, that means the form is due by March 15 to take effect for the same year. Today is March 6, so the window is close for many owners. March 15, 2025 falls on a Saturday, so ask a tax professional how the weekend rule applies to you.
What the election does
A corporation, or another entity that can elect to be taxed as a corporation, uses Form 2553 to ask the IRS for S corporation status. The income of an S corporation is generally taxed to its shareholders instead of to the company itself. Some income can still be taxed at the company level.
An LLC that files Form 2553 on time and meets the tests below is treated as a corporation as of the effective date. It does not also need to file Form 8832, the entity classification form.
Sources: IRS, Instructions for Form 2553 (revised 12/2020); IRS, S Corporations.
Who can make the election
The IRS lists several tests. The company must be a domestic corporation, or a domestic entity that can elect to be one. It must meet each of these points:
- It has no more than 100 shareholders. A married couple, and members of one family, can count as one shareholder.
- Its shareholders are people, estates, certain trusts, and certain tax-exempt organizations. Partnerships, corporations, and nonresident aliens do not qualify as shareholders.
- It has only one class of stock. Differences in voting rights are ignored for this test.
- It is not an ineligible corporation. The IRS names certain banks that use the reserve method for bad debts, insurance companies taxed under subchapter L, and domestic international sales corporations.
If any test is not met on the effective date, the election does not work. Check each one before you sign.
Sources: IRS, Instructions for Form 2553 (revised 12/2020); IRS, S Corporations.
How the 2 months and 15 days rule works
You may file Form 2553 in one of two windows. The first is no more than 2 months and 15 days after the tax year begins. The second is at any time during the tax year before the one the election is meant to cover.
The IRS gives two examples. A new calendar-year company begins its first tax year on January 7. The 2-month period ends March 6, and 15 days later is March 21. That company can file from January 7 through March 21. An election made before January 7 would not be valid, because the company had no earlier tax year.
Now take a calendar-year company that has filed as a C corporation and wants S status for the year beginning January 1. The 2-month period ends February 28 (February 29 in leap years). Fifteen days later is March 15. The company can file from January 1 of the prior year through March 15.
Sources: IRS, Instructions for Form 2553 (revised 12/2020).
What goes on the form
Every shareholder must consent. Each one signs and dates in column K of the form, or on a separate consent statement. If a husband and wife have a community interest in the stock or its income, both must consent. Each joint tenant and tenant in common must also sign. A minor can consent personally, or through a legal representative or parent. An executor or administrator signs for an estate.
You can send the original to the IRS service center listed in the instructions, or fax it. If you fax it, keep the original with the company records. Certain private delivery services are also allowed.
The IRS says a determination should generally arrive within 60 days of filing. If you ask for a tax year other than the calendar year by checking box Q1 in Part II, expect a ruling letter and about 90 more days.
Sources: IRS, Instructions for Form 2553 (revised 12/2020).
If you missed the deadline
A late election is generally effective for the tax year after the one that begins on the date entered on line E of the form. Relief may be possible, though. The IRS describes it in Revenue Procedure 2013-30.
To qualify, the company must meet these points:
- It meant to be an S corporation on the date on line E, and it fails to qualify on that date only because Form 2553 was not filed on time.
- It has reasonable cause for the late filing, and it acted diligently to fix the mistake once it found it.
- It files Form 2553 within 3 years and 75 days of the date on line E, and it can provide statements from its shareholders that they reported their income as if the election were in place.
You must explain the reasonable cause and the steps you took to correct it. Write "FILED PURSUANT TO REV. PROC. 2013-30" in the top margin of the first page of Form 2553. Certain late elections can instead be attached to Form 1120-S.
If the relief rules do not fit, the company generally has to request a private letter ruling and pay a user fee.
Sources: IRS, Instructions for Form 2553 (revised 12/2020); Revenue Procedure 2013-30, cited in those instructions (IRS, Rev. Proc. 2013-30).
A short checklist before March 15
Confirm the effective date you want. Count 2 months and 15 days from it. Make sure every shareholder qualifies and signs. Keep a copy of what you send, along with proof of the date you filed. Then watch for the IRS notice of acceptance. If you cannot meet the date, look at the late election relief above before you do anything else.
Tax advice depends on your facts. A licensed tax professional can confirm that your company meets each test.