Form 2553 — Election by a Small Business Corporation
The S-Corporation election form. Filing deadlines, late election relief, shareholder consent requirements, and common pitfalls that void the election.
What Form 2553 Does
Form 2553 is the election form a domestic corporation files with the IRS to be treated as an S-Corporation for federal income tax purposes under §1362. Once effective, the corporation's income, deductions, credits, and losses pass through to shareholders and are reported on their individual returns — avoiding the double taxation of a C-Corporation.
The election also unlocks the §199A qualified business income deduction for shareholders, allows the S-Corp to pay reasonable compensation to shareholder-employees (reducing self-employment tax), and enables contributions to retirement plans on W-2 wages rather than net self-employment income.
Filing Deadlines — The Two Windows
| Scenario | Deadline | Notes |
|---|---|---|
| New corporation — elect for current year | Within 75 days of incorporation (or start of tax year) | Day 1 = date of incorporation, first shareholder, first asset, or first business activity — whichever is earliest |
| Existing corporation — elect for next year | Any time during the prior tax year | Election is effective January 1 of the following year |
| Late election — Rev. Proc. 2013-30 | No later than 3 years and 75 days after the intended effective date | Must meet reasonable cause criteria; all shareholders must consent |
Critical trap: The 75-day window begins on the earliest of: (1) the date the corporation had shareholders, (2) acquired assets, or (3) began doing business — not necessarily the date of state incorporation. Many practitioners miss this and file late.
Eligibility Requirements — All Must Be Met
| Requirement | Detail |
|---|---|
| Domestic corporation | Must be incorporated in the U.S. or a U.S. territory |
| Eligible shareholders only | Individuals, estates, certain trusts (QSST, ESBT, grantor trusts, §678 trusts, testamentary trusts for 2 years). No partnerships, C-Corps, or non-resident aliens. |
| 100 shareholder limit | Members of a family (6 generations) count as one shareholder |
| One class of stock | Voting vs. non-voting differences are permitted; economic differences are not |
| Not an ineligible corporation | Cannot be a financial institution using reserve method, insurance company, DISC, or §936 corporation |
How to Complete Form 2553
Part I — Election Information
- Line A: Name and EIN of the corporation — must match IRS records exactly
- Line E: Effective date of election — this is the date the S-Corp status begins, not the filing date
- Line F: Selected tax year — calendar year (Dec 31) is default; fiscal year requires Part II or III
- Line G: Name and title of officer signing — must be an authorized officer, not a shareholder alone
Part I — Shareholder Consent Schedule
Every shareholder who held stock at any time during the period beginning on the first day of the first year for which the election is to be effective and ending on the date the election is made must sign. Missing one shareholder consent voids the entire election.
| Column | What to Enter |
|---|---|
| Name and address | Legal name matching the shareholder's tax return |
| SSN or EIN | Required — election is invalid without TINs |
| Number of shares | Shares held on the date of election |
| Date acquired | Date each shareholder acquired their shares |
| Tax year end | Shareholder's tax year end (usually Dec 31 for individuals) |
Late Election Relief — Rev. Proc. 2013-30
If the 75-day window was missed, the IRS provides automatic relief under Rev. Proc. 2013-30 if all of the following are true:
- The corporation intended to be an S-Corp from the intended effective date
- The corporation and all shareholders reported income consistently with S-Corp status for the year(s) the election should have been in effect
- Less than 3 years and 75 days have passed since the intended effective date
- The corporation has reasonable cause for the failure to timely file
To request relief, write "FILED PURSUANT TO REV. PROC. 2013-30" at the top of Form 2553 and attach a statement explaining the reasonable cause. File directly with the IRS Service Center where the corporation files its income tax return — do not file with the regular return.
If more than 3 years and 75 days have passed, the corporation must file a private letter ruling request under Rev. Proc. 2022-1, which carries a significant user fee (currently $12,600 for most entities).
Where and How to File
| Method | Detail |
|---|---|
| File with the IRS Service Center where the corporation files its income tax return (see Form 2553 instructions for current addresses) | |
| Fax | IRS accepts fax filing — number varies by Service Center; confirm in current instructions |
| With first return | Can attach to the first Form 1120-S if filing within the 75-day window |
| Confirmation | IRS will send CP261 (acceptance) or CP264 (denial). Always follow up if no response within 60 days. |
60-Month Waiting Period After Termination
Under §1362(g), if an S-Corp election is terminated (voluntarily or involuntarily), the corporation generally cannot re-elect S-Corp status for 5 years (60 months) without IRS consent. Involuntary terminations occur when:
- An ineligible shareholder acquires stock (e.g., a non-resident alien or another corporation)
- The number of shareholders exceeds 100
- A second class of stock is created
- Passive investment income exceeds 25% of gross receipts for 3 consecutive years (if the corporation has C-Corp E&P)
To re-elect within the 60-month window, the corporation must file a ruling request showing that the termination was inadvertent or that the IRS should otherwise consent.
Common Errors That Void the Election
- Missing shareholder signatures — every shareholder who held stock during the election period must consent
- Wrong effective date — using the incorporation date when business activity started earlier
- EIN mismatch — using the wrong EIN (e.g., sole proprietor EIN instead of the corporation's EIN)
- Filing with the wrong service center — Form 2553 must go to the service center for the corporation's return, not the shareholder's address
- No confirmation follow-up — not following up on CP261 means you may not know the election was rejected until audit
Practitioner FAQs
Yes — an LLC can be treated as a corporation by filing Form 8832 (entity classification election), and then elect S-Corp status by filing Form 2553. Both elections can be filed simultaneously. The LLC must meet all S-Corp eligibility requirements (single class of membership interest, eligible members, etc.).
No. The election is permanent until terminated. Once accepted, the corporation files Form 1120-S annually without re-electing. The election remains in effect until voluntarily revoked (requires consent of shareholders holding more than 50% of shares) or involuntarily terminated.
Use Rev. Proc. 2013-30 for automatic late election relief if within 3 years and 75 days of the intended effective date. The corporation must have filed (or will file) Form 1120-S and all shareholders must have reported income consistent with S-Corp status. Attach a reasonable cause statement to Form 2553 and write "FILED PURSUANT TO REV. PROC. 2013-30" at the top.
Yes, but only certain trusts qualify: grantor trusts (§671–§679), qualified subchapter S trusts (QSST) under §1361(d), electing small business trusts (ESBT) under §1361(e), voting trusts, and testamentary trusts for up to 2 years after the deemed owner's death. A trust that does not qualify as one of these types will immediately terminate the S-Corp election upon acquiring stock.
Form 8832 is the entity classification election — it controls whether an entity is treated as a corporation, partnership, or disregarded entity for federal tax purposes. Form 2553 is the S-Corp election — it controls whether a corporation (or an LLC that has elected corporate treatment) is taxed as an S-Corp rather than a C-Corp. An LLC that wants S-Corp treatment must file Form 8832 first (or simultaneously) to be classified as a corporation, then file Form 2553 to elect S-Corp status.
Ready to Implement These Strategies?
Join thousands of tax professionals using the Tax Intelligence Engine to serve clients better.
The information on this page is intended for licensed tax professionals (CPAs, EAs, and tax attorneys) and is provided for educational and research purposes only. Tax law is complex and fact-specific — all strategies discussed are subject to limitations, phase-outs, and conditions that may not apply to every client situation. Practitioners should independently verify all information against current IRS guidance, Treasury Regulations, and applicable state law before advising clients. This content does not constitute legal or tax advice.
Ready to Reduce Your Tax Burden?
Our tax advisors specialize in helping professionals and business owners implement these strategies. Book a free strategy call to see how much you could save.
Learn How to Implement This