The IRS 2553 form is a document that allows a corporation to elect to be taxed as an S corporation, which can provide significant tax benefits. By making this election, eligible small businesses can avoid double taxation on their income. If you're considering this option, take the next step by filling out the form; click the button below to get started.
The IRS 2553 form plays a crucial role for small businesses looking to elect S Corporation status. This form allows eligible corporations and limited liability companies (LLCs) to be taxed as S Corporations, which can lead to significant tax benefits. By filing the 2553, businesses can avoid double taxation on corporate income, as profits are passed directly to shareholders and taxed at their individual rates. Timing is essential; the form must be submitted within a specific window to ensure the election takes effect for the current tax year. Additionally, the form requires detailed information about the business, including its name, address, and the number of shareholders. It also necessitates the consent of all shareholders, making it a collaborative effort. Understanding the intricacies of the IRS 2553 form is vital for any business owner aiming to optimize their tax strategy and comply with IRS regulations.
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 2553 form is a critical step for businesses looking to elect S corporation status. After filling out the form, you will submit it to the IRS for approval. Ensure that all information is accurate and complete to avoid delays in processing.
The IRS Form 2553 is a crucial document for small business owners who wish to elect S Corporation status for their corporation or limited liability company (LLC). By filing this form, businesses can benefit from pass-through taxation, which means that the income is not taxed at the corporate level but instead passes through to the owners' personal tax returns. This can lead to significant tax savings for many small businesses.
To be eligible to file Form 2553, a business must meet several criteria:
If your business meets these requirements, you can take advantage of the benefits that come with S Corporation status.
Timing is essential when it comes to filing Form 2553. Generally, you must submit the form:
Filing late can result in your business missing out on the S Corporation benefits for that tax year, so be sure to keep an eye on deadlines.
After you file Form 2553, the IRS will review your application. If approved, your business will be recognized as an S Corporation for tax purposes. You will receive a confirmation from the IRS, which is essential for your records. It's important to maintain compliance with S Corporation regulations moving forward, as failing to do so could jeopardize your status.
Yes, you can revoke your S Corporation status. However, the process requires careful consideration and specific steps. To revoke, you must file a statement with the IRS that includes:
Keep in mind that once revoked, the business may not be able to re-elect S Corporation status for five years, so weigh your options carefully.
If your Form 2553 is rejected, the IRS will provide a reason for the denial. Common reasons include missing signatures, failure to meet eligibility requirements, or late filing. If you believe the rejection was in error, you can appeal the decision. Alternatively, if the rejection was due to a simple mistake, you may correct the issue and refile the form. Always ensure that you double-check your application for accuracy before submission to minimize the risk of rejection.
Incorrect Entity Type Selection: Many individuals mistakenly select the wrong type of entity when filling out the form. It is crucial to ensure that the business is eligible to elect S corporation status.
Missing Signatures: A common error involves not obtaining the necessary signatures from all shareholders. Each shareholder must sign the form for it to be valid.
Filing Deadline Oversights: Some people fail to file the form within the required timeframe. Missing the deadline can result in the loss of S corporation status for the tax year.
Incorrect Tax Year Designation: Choosing an inappropriate tax year can lead to complications. It's essential to select a tax year that aligns with the S corporation rules.
Failure to Include All Shareholders: Some applicants neglect to list all shareholders on the form. Every shareholder must be accounted for to ensure compliance with IRS regulations.
Omitting Necessary Information: Leaving out critical information, such as the business's EIN or address, can delay processing and create issues down the line.
Not Understanding Eligibility Requirements: Many individuals overlook the eligibility criteria for S corporations. Understanding these requirements is vital before submitting the form.
Inaccurate or Incomplete Financial Information: Providing incorrect financial data can lead to complications. It's important to ensure that all financial information is accurate and complete.
When electing to be treated as an S Corporation by filing the IRS Form 2553, there are several other forms and documents that may be necessary to ensure compliance with IRS regulations and to maintain good standing. Here’s a brief overview of these important documents.
Understanding these forms and documents can help streamline the process of establishing and maintaining an S Corporation. Being proactive about compliance not only supports smooth operations but also protects your business from potential legal issues down the road.
The IRS Form 8832 is used by eligible entities to elect to be classified as a corporation or partnership for federal tax purposes. Similar to Form 2553, which is specifically for S Corporation status, Form 8832 allows businesses to choose how they want to be taxed. Both forms require timely submission to ensure the desired tax classification takes effect in the appropriate tax year. The choice made on either form can significantly impact the tax obligations of the business.
Form 1065 is the U.S. Return of Partnership Income. This form is filed by partnerships to report income, deductions, gains, and losses. While Form 2553 is about electing S Corporation status, Form 1065 is used by partnerships that do not make this election. Both forms require detailed financial information, but they serve different types of business entities and tax classifications.
Form 1120 is the U.S. Corporation Income Tax Return. Corporations use this form to report their income and calculate their tax liability. Like Form 2553, which is used for S Corporations, Form 1120 is essential for corporations to fulfill their tax responsibilities. However, while Form 2553 allows for pass-through taxation, Form 1120 subjects corporations to double taxation on their profits.
The IRS Form 941 is the Employer’s Quarterly Federal Tax Return. Employers use this form to report income taxes, Social Security tax, and Medicare tax withheld from employee wages. Similar to Form 2553, which can affect how a business is taxed, Form 941 impacts the employer's tax obligations. Both forms play crucial roles in ensuring compliance with federal tax laws.
Form 1065-B is the U.S. Return of Income for Electing Large Partnerships. This form is for partnerships that elect to be treated as large partnerships. Like Form 2553, it allows for a specific tax treatment option, but it is tailored for larger partnerships. Both forms require timely filing and can influence how income is reported and taxed.
Form 1120S is the U.S. Income Tax Return for an S Corporation. This form is specifically designed for S Corporations that have made the election using Form 2553. It details the income, deductions, and credits of the S Corporation. Both forms are interconnected, as Form 2553 enables the election, while Form 1120S is the means of reporting the financial results of that election.
The IRS Form 990 is the Return of Organization Exempt from Income Tax. Nonprofit organizations use this form to provide the IRS with information about their activities, finances, and governance. While it differs from Form 2553 in terms of purpose and entities involved, both forms require detailed reporting and can influence the tax status of the organization involved.
Form W-2 is the Wage and Tax Statement. Employers use this form to report wages paid to employees and the taxes withheld. Like Form 2553, which affects how a business is taxed, Form W-2 is critical for ensuring that employees receive accurate information for their personal tax returns. Both forms help maintain compliance with tax obligations, albeit for different purposes.
Filling out the IRS Form 2553 can be a crucial step for small business owners who wish to elect S Corporation status. Here are some important dos and don’ts to keep in mind:
By following these guidelines, you can help ensure a smooth process when electing S Corporation status for your business.
The IRS Form 2553 is an important document for small businesses that wish to elect S Corporation status. However, there are several misconceptions surrounding this form that can lead to confusion. Below is a list of common misunderstandings about the IRS Form 2553, along with explanations to clarify each point.
Understanding these misconceptions can help small business owners make informed decisions regarding their tax status and ensure compliance with IRS regulations.
The IRS Form 2553 is essential for businesses that want to elect S corporation status. Here are key takeaways for filling out and using this form:
Completing the IRS Form 2553 accurately is crucial for ensuring the desired tax treatment for your business.