Filing for S-corporation status with the IRS requires compliance with strict time guidelines. Form 2553 must be filed by the 15th day of the third month after your corporation’s fiscal year. For most corporations, that means you must file by March 15 for the S-Corporation election to be effective for the current fiscal year.
If you file Form 2553 late, your election to be an S-corporation becomes effective the next fiscal year. However, if you qualify, you can file late and make your S-corporation election retroactive using IRS Revenue Procedure 2003-43. Your corporation will qualify to file Form 2553 late if:
1. Your corporation intended to be an S-corporation as of the intended effective date on your Form 2553;
2. Your corporation failed to obtain S-Corporation status solely because it did not file Form 2553 on time;
3. The original due date of your Form 2553 was less than 2 years ago;
4. Your corporation had reasonable cause or inadvertently failed to file form 2553 on time;
5. Your corporation has not filed tax returns for the year(s) it intends to be an S-Corporation (or your corporation filed tax returns as an S-Corporation using Form 1120S);
6. You file Form 2553 within 6 months after the original due date (no extensions) of the first tax return for which your corporation intended to be an S-Corporation; and
7. All of your corporation’s shareholders have not reported income in a manner inconsistent with your corporation’s intention to be an S-Corporation.
If you meet these requirements and wish to file a late election for S-Corporation status, write the following language at the very top of your Form 2553: “FILED PURSUANT TO REV. PROC 2003-43” and include a statement, on a separate sheet, addressing requirement #4 above. And make sure all shareholders sign both documents.