Overview of Form 2553 Filing for S Corporation Election
Generally, the IRS will approve your Form 2553 within 60 days of filing. However, 2020 and 2021 have not been standard years. You cannot file this form online. You need to file IRS Form 2553, Election by a Small Business Corporation. You can file your Form 2553 with the IRS by fax, or by mail. Filing options for IRS Form 2553 include mail and fax filing.
Filing Form 2553 helps in reducing tax liability. Form 2553 needs to be filed before two months and 15 days once the tax year starts and the S Corp election is to take effect. If Form 2553 isn’t filed on time, there is relief for late elections. The corporation intended to be classified as an S corporation is an eligible entity. It fails to qualify for an S corporation election because Form 2553 is not filed on time. There is reasonable cause for missing the deadline. The corporation and all shareholders reported their income in a consistent manner with the corporation’s intention to file as an S corporation.
Approval of S-Corp Election
Typically, it will take 45 to 60 days for the IRS to approve the S-Corp election. An approval letter (CP261 Notice) will be mailed. Be sure to keep this letter in your files. Though processing times vary, most companies receive a response to their Form 2553 filings within 60 days. With staffing shortages at the IRS, Form 2553 approvals have taken as long as six months in recent years. If you misplace Form 2553, you’ll need to contact the IRS for a new one. You can access a PDF of IRS Form 2553 here. You will not be able to electronically file your taxes as an S corporation until the IRS has processed your election.
Filing Form 2553 after the Deadline
You can file Form 2553 after the deadline if you can prove you had a good reason for filing late. This area is where you make your case for why your form is submitted late and what actions you took once you realized you missed the filing date. You can enter your reason on the lines provided or on an attached statement.
Key Deadlines and Benefits of Form 2553
Filing Form 2553 on time is important if you want to take advantage of S Corp treatment for the tax year. You must file Form 2553 no later than two months and 15 days after the beginning of the tax year when you want the S Corp election to take effect. Established businesses can also file Form 2553 any time during the preceding tax year.
Conclusion:
In conclusion, Form 2553 plays a crucial role in electing S Corporation status, reducing tax liabilities, and ensuring proper tax treatment for small businesses. The process involves timely filing, approval from the IRS, and adherence to specific deadlines to enjoy the benefits associated with S Corporation election.