The IRS 2553 form is a document used by small businesses to elect to be taxed as an S corporation, offering potential tax benefits and limited liability. Completing this form enables eligible businesses to avoid double taxation on income at the corporate level. Ensure you understand the requirements and benefits by filling out the form; click the button below to get started.
The IRS Form 2553 is a crucial document for businesses aiming to elect S corporation status, providing significant advantages such as pass-through taxation. Completing this form allows a corporation to avoid double taxation on corporate income, enabling profits and losses to be reported on shareholders' personal tax returns. However, the process involves specific requirements, including deadlines for submission and eligibility criteria that must be met. Corporations must file the form either within 75 days of their formation or by March 15 of the tax year for which the election is to take effect. Additionally, all shareholders must consent to the election, making the coordination of signatures an essential component of the filing process. This article will delve into the nuances of completing Form 2553, the implications of S corporation status, and important considerations to keep in mind when navigating the paperwork. Understanding these elements ensures that business owners can take full advantage of the benefits offered by the S corporation structure.
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 requires careful attention to detail. After filling out the form, it will need to be submitted to the Internal Revenue Service. Ensure that all information is accurate and complete, as this will help facilitate a smooth process.
This form is used by eligible small businesses to elect to be taxed as an S corporation. By making this election, businesses can avoid double taxation on income, which can be a significant benefit.
To file Form 2553, a business must meet certain criteria. It must be a domestic corporation, have no more than 100 shareholders, issue only one class of stock, and have eligible shareholders that are individuals, certain trusts, or estates.
Form 2553 should be filed within 75 days of the beginning of the tax year for which the election is to take effect. If a corporation misses this deadline, it may still be able to file for a late election, but specific criteria must be met.
The form requires basic information about the corporation, including the name, address, and employer identification number (EIN). Additionally, it asks for details about each shareholder, such as their consent to the S corporation election and their percentage of stock ownership.
Once submitted, the IRS will review the election. If approved, the corporation will receive a notification, and the S corporation status will take effect. Businesses must then adhere to ongoing requirements, like filing annual tax returns as an S corporation.
Yes, a corporation can revoke its S corporation status by filing a statement with the IRS. It's important to follow specific guidelines, and the revocation will take effect on the date specified in the statement.
If a corporation fails to file Form 2553 on time, it may be subject to double taxation on its income, losing the benefits associated with S corporation status. Late filing can be resolved, but it can complicate tax situations.
No, Form 2553 is not filed every year. Once the S corporation election is made, it remains in effect until it is revoked or the corporation no longer meets the qualifying requirements.
For assistance, you may want to consult a tax professional or accountant who is familiar with S corporation elections. The IRS website also provides resources and instructions related to the form.
When filling out the IRS Form 2553 to elect S corporation status, many individuals make critical mistakes that can delay processing or result in rejection. One common error is incorrect taxpayer identification numbers (TINs). It is essential that the TIN for the corporation and any shareholders are accurate. A simple typo can lead to significant complications down the road, including difficulties in tax reporting.
Another mistake often observed is failing to obtain signatures from all shareholders. The IRS requires that all eligible shareholders sign the form, confirming their consent to the election. Missing signatures can invalidate the election, not to mention create additional paperwork and confusion for everyone involved.
Some people forget to submit Form 2553 within the required timeframe. The IRS stipulates that the form must be filed by a certain date, typically within 75 days of the beginning of the tax year for which the election is made. Late submissions may not be accepted, leading to the loss of S corporation status for that tax year.
Incorrectly marking the election type on the form is another frequent pitfall. Form 2553 has specific options for various situations. If a business is eligible for multiple types of elections, selecting the wrong option can lead to complications. It's crucial to read each section carefully and choose accurately.
In some cases, individuals do not double-check the entity's qualifications for S corporation status. Not all entities qualify, and oversight in this area could mean that the election won't be recognized. Ensure that the business complies with all eligibility requirements before filing.
Another area of concern is providing incomplete or unclear information about shares. The IRS needs specific details regarding the number and class of shares and the shareholders driving the election. Omitting this information can cause delays and potential rejection of the form.
Lastly, individuals often overlook keeping a copy of the completed form for their records. It is essential to retain a copy for reference and proof of submission should any questions arise later. Failing to document this can lead to unnecessary complications in future interactions with the IRS.
When submitting the IRS Form 2553 to elect S Corporation status, several other forms and documents can be beneficial or necessary for the process. These documents help ensure compliance with tax regulations and provide essential information to the IRS. Below is a list of commonly used forms that accompany the IRS Form 2553.
Being aware of these forms and documents can streamline the process of establishing and maintaining S Corporation status. Proper preparation ensures adherence to IRS requirements and facilitates better management of business tax obligations.
The IRS Form 2553 is a crucial document for businesses opting to be taxed as an S corporation. Several other documents share similar attributes or functions in regard to business operations and tax status. Here are ten forms that bear resemblance to the IRS 2553 form:
When completing the IRS Form 2553, it's crucial to follow certain guidelines to ensure accuracy and compliance. Here’s a helpful list of dos and don’ts:
Understanding the IRS Form 2553 is crucial for any business owner considering electing S Corporation status. Here are some key takeaways that can simplify this process:
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