The IRS Form 2553 is a crucial document that allows small businesses to elect to be taxed as an S corporation. This election can provide significant tax benefits, including avoiding double taxation on corporate income. Understanding how to properly complete and submit this form is essential for business owners looking to optimize their tax situation.
The IRS 2553 form plays a crucial role for small business owners looking to elect S Corporation status for their entity. By filing this form, a corporation or limited liability company (LLC) can choose to be taxed as an S Corporation, which allows for pass-through taxation, meaning that the business's income is reported on the owners' personal tax returns, avoiding double taxation at the corporate level. This election can lead to potential tax savings and other benefits, such as reduced self-employment taxes for owners. However, to qualify, the business must meet specific criteria, including having no more than 100 shareholders and only one class of stock. The form requires essential information such as the entity's name, address, and the date of incorporation, along with the signatures of all shareholders. Timeliness is critical; the form must be filed within a specific timeframe to ensure the S Corporation status is effective for the current tax year. Understanding the implications and requirements of the IRS 2553 form is essential for business owners aiming to optimize their tax situation.
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.
Completing the IRS Form 2553 is an important step for small businesses that wish to elect S corporation status. This process requires careful attention to detail to ensure all information is accurate and submitted on time. Below are the steps to successfully fill out the form.
After submitting the form, it is essential to keep a copy for your records. You will receive confirmation from the IRS regarding the acceptance of your S corporation election. If there are any issues, the IRS may contact you for clarification or additional information.
What is Form 2553?
Form 2553 is a document that allows a corporation to elect to be treated as an S corporation for federal tax purposes. This election can provide significant tax benefits, including the avoidance of double taxation on corporate income.
Who can file Form 2553?
Only certain types of corporations can file Form 2553. To qualify, the corporation must:
When should Form 2553 be filed?
Form 2553 must be filed within 75 days of the corporation's formation or by the 15th day of the third month of the tax year for which the election is to be effective. If the deadline is missed, the corporation may still be able to make the election by following specific procedures outlined by the IRS.
What information is required on Form 2553?
Form 2553 requires several key pieces of information, including:
What happens after filing Form 2553?
After submitting Form 2553, the IRS will review the application. If approved, the corporation will be treated as an S corporation for tax purposes. The corporation will receive a confirmation from the IRS, which should be kept for records. If the application is denied, the corporation may have to revert to C corporation status and can reapply in the future.
Are there any ongoing requirements for S corporations?
Yes, S corporations must adhere to specific ongoing requirements to maintain their status. These include:
Failure to comply with these requirements can lead to the loss of S corporation status.
Filing the IRS Form 2553, which is used to elect S corporation status, is a crucial step for many small business owners. However, several common mistakes can lead to delays or even rejections of the application. One frequent error is failing to meet the deadline for submission. The form must be filed within 75 days of the beginning of the tax year. Missing this deadline can result in the corporation being taxed as a C corporation for the entire year.
Another common mistake is incorrect or incomplete information on the form. For example, omitting the name or taxpayer identification number of the corporation can lead to processing issues. It's essential to double-check that all required fields are filled out accurately. Errors in the business name or address can also create complications.
Many individuals overlook the requirement for all shareholders to sign the form. If any shareholder does not sign, the IRS may reject the application. It’s important to ensure that every individual who holds shares in the corporation provides their signature, confirming their agreement with the S corporation election.
In addition, some applicants mistakenly believe that they can submit the form electronically. Currently, the IRS only accepts Form 2553 in paper format. Printing, signing, and mailing the form is necessary to ensure it is processed correctly.
Another issue arises when businesses do not provide the necessary supporting documentation. If the corporation has previously elected S status or has undergone changes, attaching the relevant documents can help clarify the situation for the IRS. Without this information, the application may be delayed or denied.
Many people also fail to understand the eligibility requirements for S corporations. For instance, having more than 100 shareholders or being owned by a corporation or partnership disqualifies a business from S status. It’s vital to review these requirements before submitting the form.
Lastly, some applicants neglect to keep a copy of the submitted Form 2553 for their records. This oversight can lead to confusion later, especially if the IRS requests confirmation of the election. Retaining a copy ensures that all parties involved have access to the same information regarding the corporation's tax status.
The IRS Form 2553 is used by small businesses to elect S Corporation status for tax purposes. When filing this form, there are several other documents and forms that may be necessary or beneficial to include. Below is a list of these forms and documents, along with brief descriptions of their purposes.
Understanding these forms and documents can help ensure compliance with IRS requirements and facilitate smoother operations for businesses electing S Corporation status. Proper preparation and timely submission of these forms can significantly impact a business's tax obligations and legal standing.
The IRS Form 1065 is similar to Form 2553 in that both are used by entities to report information to the Internal Revenue Service. Form 1065 is specifically for partnerships, allowing them to report income, deductions, gains, and losses. Like Form 2553, it requires detailed information about the entity and its members. Both forms also serve as a means for the IRS to understand the tax obligations of the entities involved.
Form 1120, the U.S. Corporation Income Tax Return, shares similarities with Form 2553 as it is also a tax-related document. Corporations use Form 1120 to report their income, gains, losses, deductions, and credits. Both forms require specific information about the entity’s structure and ownership. However, while Form 2553 is used to elect S corporation status, Form 1120 is for C corporations, highlighting the different tax treatments for these types of entities.
Form 8832, the Entity Classification Election, is another document that parallels Form 2553. This form allows a business entity to choose how it will be classified for federal tax purposes. Like Form 2553, it requires the entity to provide detailed information about its structure. Both forms are crucial for ensuring that the entity is taxed appropriately based on its chosen classification.
Form 941, the Employer's Quarterly Federal Tax Return, is similar in that it involves tax reporting for businesses. While Form 2553 is about electing S corporation status, Form 941 is used by employers to report income taxes, Social Security tax, and Medicare tax withheld from employee wages. Both forms require accurate reporting to comply with IRS regulations and avoid penalties.
Form 1065-B, the U.S. Return of Income for Electing Large Partnerships, also resembles Form 2553. This form is for large partnerships that elect to be taxed as a partnership. Like Form 2553, it requires detailed information about the partnership's income and deductions. Both forms facilitate the IRS’s understanding of how the entity operates and its tax responsibilities.
Form 1120-S is closely related to Form 2553 as it is specifically for S corporations. After filing Form 2553 to elect S corporation status, entities must use Form 1120-S to report their income, deductions, and credits. Both forms are integral to the S corporation tax process, ensuring compliance with IRS rules and regulations.
Form 2553 itself is often compared to state-level election forms, which allow businesses to elect specific tax treatments at the state level. These state forms typically require similar information regarding the entity’s structure and ownership. Both sets of forms aim to establish how the business will be taxed, whether at the federal or state level.
Form 4562, the Depreciation and Amortization form, shares a connection with Form 2553 in that both are utilized by businesses to report financial information. While Form 2553 is focused on entity classification, Form 4562 deals with the depreciation of assets. Accurate reporting on both forms is essential for proper tax treatment and compliance with IRS guidelines.
Form 8822, the Change of Address form, can be seen as similar in that it is used by businesses to communicate important information to the IRS. While it does not directly relate to tax classification like Form 2553, it is essential for ensuring that the IRS has the correct information on file. Both forms are part of the broader framework of compliance and communication with the IRS.
Finally, Form 1040, the U.S. Individual Income Tax Return, can be compared to Form 2553 in terms of its role in tax reporting. Individuals use Form 1040 to report their income and calculate their tax liabilities. While the focus is different—individuals versus entities—both forms are essential for the IRS to assess tax obligations accurately.
When filling out the IRS Form 2553, it is important to follow certain guidelines to ensure accuracy and compliance. Below is a list of things you should and shouldn't do:
The IRS Form 2553 is essential for small businesses wishing to elect S Corporation status. However, several misconceptions surround this form. Below are five common misunderstandings.
Understanding these misconceptions can help ensure that businesses make informed decisions regarding their tax status and obligations.
The IRS Form 2553 is essential for small businesses electing to be treated as an S corporation. Understanding how to fill it out and use it effectively can streamline your tax process. Here are key takeaways regarding this form:
By following these guidelines, businesses can navigate the process of electing S corporation status more efficiently.
Free IRS 2553 Template in PDF