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The IRS Form 2553 is a crucial document for small business owners who wish to elect S Corporation status for their entities. This form allows eligible corporations to be taxed as S Corporations, which can lead to significant tax benefits, including avoiding double taxation on corporate income. By filing Form 2553, business owners can pass corporate income, losses, deductions, and credits directly to shareholders, who then report these items on their personal tax returns. The eligibility criteria for this election include having a limited number of shareholders, all of whom must be individuals, certain trusts, or estates, and the corporation must be a domestic entity. Additionally, the form must be filed within a specific timeframe to ensure that the election is effective for the desired tax year. Understanding the nuances of this form is essential for business owners looking to optimize their tax situation while maintaining compliance with IRS regulations. Completing Form 2553 accurately and timely can significantly impact the financial health of a business.

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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,

Department of the Treasury

Colorado, Florida, Hawaii, Idaho, Iowa, Kansas,

Internal Revenue Service

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)

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

Date

L

Stock owned or

percentage of ownership

(see instructions)

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)

Form 2553 (Rev. 12-2017)

Form 2553 (Rev. 12-2017)

Page 3

Name

 

Employer identification number

 

 

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.

Form 2553 (Rev. 12-2017)

Form 2553 (Rev. 12-2017)

Page 4

Name

Employer identification number

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

Employer identification number

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

 

Date

*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.

Form 2553 (Rev. 12-2017)

➤ PDF File

Form Specifications

Fact Name Description
Purpose The IRS Form 2553 is used by small businesses to elect S Corporation status for tax purposes.
Eligibility To qualify, the business must meet certain criteria, including having no more than 100 shareholders and only one class of stock.
Filing Deadline The form must be filed within 75 days of the beginning of the tax year for which the election is to take effect.
State-Specific Forms Some states require additional forms to recognize S Corporation status, governed by state laws such as California Revenue and Taxation Code Section 23800.

IRS 2553: Usage Guidelines

Filling out the IRS Form 2553 is an important step for businesses that want to elect to be treated as an S corporation for tax purposes. Completing this form correctly is essential to ensure that your business receives the intended tax benefits. The following steps will guide you through the process of filling out the form.

  1. Obtain the IRS Form 2553. You can download it from the IRS website or request a physical copy.
  2. Fill in the basic information about your business in Part I. This includes the name, address, and Employer Identification Number (EIN) of your corporation.
  3. Indicate the date of incorporation and the state where your corporation was formed.
  4. Choose the tax year for your corporation. You can select a calendar year or a fiscal year, but make sure to follow the guidelines provided in the form.
  5. In Part II, list the names and addresses of all shareholders. Each shareholder must consent to the S corporation election, so ensure that their information is accurate.
  6. Each shareholder should sign and date the form to show their consent. This is a crucial step, as the IRS requires their approval for the election.
  7. Review the form for any errors or missing information. Double-check all entries to ensure accuracy.
  8. Submit the completed Form 2553 to the IRS. You can mail it to the appropriate address provided in the form instructions.
  9. Keep a copy of the submitted form for your records. This will be important for future reference and compliance.

Your Questions, Answered

What is IRS Form 2553?

IRS Form 2553 is a tax form that allows a corporation or an LLC to elect to be treated as an S corporation for federal tax purposes. By making this election, the business can avoid double taxation on corporate income. Instead, income, deductions, and credits pass through to shareholders, who report them on their individual tax returns. This can lead to significant tax savings for many small businesses.

Who is eligible to file Form 2553?

To be eligible to file Form 2553, a corporation must meet specific criteria. It must be a domestic corporation, have only allowable shareholders (which include individuals, certain trusts, and estates), and have no more than 100 shareholders. Additionally, the corporation must have only one class of stock. It's important to ensure that all eligibility requirements are met before filing to avoid complications.

When should Form 2553 be filed?

Form 2553 should generally be filed within 75 days of the beginning of the tax year for which the S corporation election is to take effect. For newly formed corporations, this means filing the form shortly after incorporation. If the deadline is missed, the business may need to wait until the next tax year to make the election, unless it qualifies for late election relief.

What happens after filing Form 2553?

After submitting Form 2553, the IRS will review the application. If approved, the corporation will receive confirmation of its S corporation status. This designation will affect how the business is taxed going forward. It is essential to maintain compliance with S corporation requirements to retain this status. Any changes in ownership or structure may necessitate additional filings or considerations.

Common mistakes

  1. Incorrect Entity Type Selection: Many individuals mistakenly select the wrong entity type when filling out the IRS 2553 form. It is essential to ensure that your business qualifies as an S Corporation. If you choose an incorrect type, it can lead to delays or denials.

  2. Missing Signatures: A common oversight is failing to include the necessary signatures. Both the business owner and all shareholders must sign the form. Without these signatures, the IRS will not process the application.

  3. Filing Deadline Confusion: Some people forget that there are strict deadlines for submitting the IRS 2553. To avoid issues, it’s crucial to file within 75 days of the beginning of the tax year. Missing this window can result in a missed opportunity for S Corporation status.

  4. Incorrect Shareholder Information: Providing inaccurate or incomplete information about shareholders can cause significant problems. Ensure that names, addresses, and Social Security numbers are correct and match IRS records.

  5. Failure to Include All Shareholders: It’s important to list all shareholders on the form. Omitting even one shareholder can lead to complications and may jeopardize the S Corporation election.

  6. Not Understanding Tax Implications: Some individuals underestimate the tax implications of electing S Corporation status. It’s wise to consult with a tax professional to fully understand how this choice affects your tax situation.

  7. Inaccurate or Incomplete Election Statement: The election statement must be filled out with care. Any inaccuracies or incomplete sections can lead to rejection. Double-checking the entire form before submission is a wise practice.

Documents used along the form

When forming an S Corporation, the IRS Form 2553 is essential for electing S Corporation status. However, several other forms and documents are often necessary to ensure compliance with federal and state regulations. Below is a list of important documents that may accompany the IRS Form 2553.

  • IRS Form 1120S: This is the annual tax return specifically for S Corporations. It reports income, deductions, and credits, allowing the IRS to assess the corporation's tax obligations.
  • IRS Form 941: Employers use this form to report income taxes, Social Security tax, and Medicare tax withheld from employee wages. It's filed quarterly and is crucial for payroll compliance.
  • IRS Form 940: This annual form is used to report and pay federal unemployment taxes (FUTA). It ensures that employers meet their unemployment tax obligations.
  • State S Corporation Election Form: Many states require a separate election form to recognize S Corporation status at the state level. This document varies by state.
  • Articles of Incorporation: This foundational document establishes the existence of the corporation in the state where it is formed. It includes essential details such as the corporation's name, purpose, and registered agent.
  • Operating Agreement: While not always required, this internal document outlines the management structure and operational procedures of the corporation, providing clarity among shareholders.
  • Bylaws: Bylaws govern the internal management of the corporation. They detail the roles of officers, how meetings are conducted, and other operational guidelines.
  • Employer Identification Number (EIN): This unique number, obtained from the IRS, is essential for tax reporting and opening a business bank account. It identifies the corporation for tax purposes.
  • Shareholder Agreements: This document outlines the rights and responsibilities of shareholders, including how shares can be bought or sold, which helps prevent disputes.

Completing the IRS Form 2553 is a significant step in establishing an S Corporation. However, understanding and gathering the accompanying documents is equally important. Each of these forms plays a crucial role in ensuring compliance and facilitating smooth operations for your business.

Similar forms

The IRS Form 2553 is essential for small businesses electing to be taxed as an S Corporation. However, it shares similarities with several other important tax documents. Understanding these similarities can help clarify their purposes and functions. Below are four documents that are comparable to Form 2553:

  • IRS Form 1120S: This form is used by S Corporations to report income, deductions, and credits. Like Form 2553, it is integral to the S Corporation tax structure, ensuring that the business complies with federal tax regulations.
  • IRS Form 1065: This is the form used for partnerships to report their income, deductions, and other tax-related information. Similar to Form 2553, it allows for pass-through taxation, where the income is taxed at the partner level rather than at the entity level.
  • IRS Form 941: Employers use this form to report income taxes, Social Security tax, and Medicare tax withheld from employee paychecks. Like Form 2553, it is crucial for compliance with tax obligations, especially for businesses with employees.
  • IRS Form 1040: This is the standard individual income tax return form. While it serves a different audience, it is similar in that it allows individuals to report income and claim deductions, including those from pass-through entities like S Corporations.

Each of these forms plays a significant role in the overall tax reporting process for businesses and individuals alike. Understanding their similarities can help ensure compliance and proper tax treatment.

Dos and Don'ts

When filling out the IRS 2553 form, it is important to follow certain guidelines to ensure accuracy and compliance. Here are four things to do and not to do:

  • Do read the instructions carefully before starting. Understanding the requirements will help you complete the form correctly.
  • Do provide accurate information. Double-check names, addresses, and identification numbers to avoid delays.
  • Don't forget to sign and date the form. An unsigned form may be rejected by the IRS.
  • Don't submit the form late. Timeliness is crucial for your election to be valid.

Misconceptions

The IRS Form 2553 is an important document for small businesses looking to elect S Corporation status. However, several misconceptions surround this form. Here are eight common misunderstandings:

  1. Only corporations can file Form 2553.

    This is incorrect. While the form is primarily for corporations, certain limited liability companies (LLCs) can also elect S Corporation status by filing Form 2553.

  2. Filing Form 2553 is optional for all businesses.

    Not all businesses can choose to file. Only those eligible and wishing to be taxed as an S Corporation must file this form.

  3. The form must be filed annually.

    In reality, Form 2553 is a one-time election. Once approved, the S Corporation status remains until it is revoked or the business no longer qualifies.

  4. There is no deadline for filing Form 2553.

    In fact, businesses must file Form 2553 within a specific timeframe, typically within two months and 15 days after the start of the tax year.

  5. All shareholders must agree to the S Corporation election.

    This is true. All shareholders must consent to the election by signing the form, which is a requirement for approval.

  6. Filing Form 2553 guarantees S Corporation status.

    Submitting the form does not guarantee approval. The IRS reviews the application, and if the business does not meet the requirements, the election may be denied.

  7. Once S Corporation status is elected, it cannot be changed.

    This is a misconception. A business can revoke its S Corporation status or switch back to a C Corporation by following the proper procedures.

  8. Form 2553 is only for tax purposes.

    While the primary purpose is tax-related, electing S Corporation status can also impact other aspects of business operation, such as liability and ownership structure.

Key takeaways

Filling out the IRS Form 2553 is a crucial step for small business owners who wish to elect S Corporation status. Understanding the process and requirements can significantly benefit your business. Here are some key takeaways to keep in mind:

  1. Eligibility Requirements: To file Form 2553, your business must meet specific criteria, including being a domestic corporation and having no more than 100 shareholders.
  2. Timely Filing: The form must be filed within 75 days of the start of the tax year for which the S Corporation election is to take effect. Missing this deadline can result in a delay or denial of your election.
  3. Shareholder Consent: All shareholders must consent to the S Corporation election. This is typically done by signing the form, so ensure that everyone is on board.
  4. Tax Year Selection: When filling out the form, you will need to select your tax year. Most S Corporations use the calendar year, but some may choose a fiscal year.
  5. Form Accuracy: Double-check all information for accuracy before submitting. Errors can lead to processing delays or rejection of your application.
  6. Filing Methods: You can file Form 2553 by mail or electronically, depending on the IRS guidelines. Be sure to follow the instructions for your chosen method.
  7. Impact on Taxes: Electing S Corporation status can have significant tax implications. It allows profits and losses to pass through to shareholders, avoiding double taxation at the corporate level.
  8. Revocation of Election: If you decide to revoke your S Corporation status, you must follow specific procedures outlined by the IRS. This process can also affect your tax obligations.
  9. Consult a Professional: Given the complexities involved, it may be beneficial to consult a tax professional or accountant. Their expertise can help ensure compliance and optimize your tax situation.

By keeping these takeaways in mind, you can navigate the process of filling out and using IRS Form 2553 with greater confidence and clarity.