Filing Deadlines for Form 2553
The deadline for filing Form 2553 depends on whether you are a newly formed or existing business. For a newly formed business, you need to file within two months and 15 days of formation to be taxed as an S corporation in the current year. For an existing business, attach Form 2553 to your current or late-filed Form 1120S, as long as it is within three years and 75 days of the intended election date.
Qualifying for S Corporation Status
Filing Form 2553 enables a business to elect S corporation status, which can result in tax savings compared to other entity types. To qualify, a business must meet requirements like having 100 or fewer shareholders and having only one class of stock. The Form lists information on all shareholders, including names, addresses, Social Security or EIN numbers, ownership percentages, and consent signatures.
Missing the Deadline
What happens if the deadline is missed depends on the situation. For a newly formed business, S corporation status will still take effect the following year. For an existing business, relief may be available if reasonable cause can be shown.
Late Filing and Reasonable Cause
Reasonable causes for late filing are neglect by the responsible person or tax professional. To file late, attach Form 2553 to the current year Form 1120S within three years and 75 days of the intended election date or to a late-filed Form 1120S, explaining why filing late in the form’s narrative section.
Late Filing Penalties and Extensions
Form 1120S has a late file penalty of $195 per shareholder per month for up to 12 months. Today is the last date for filing an S-Corp extension. You could have e-filed form 7004 to extend. After forming a corporation, S Corporation Status can be elected by timely filing Form 2553 to get pass-through tax treatment.
There is a $85 penalty per shareholder per month for late filing S-Corporation returns after December 20, 2007.