Late S Corporation Election: A Step-by-Step Guide
- Evin Wick
- Jun 30
- 3 min read
Updated: Jul 2
Missing the regular deadline for filing Form 2553—which is 2 months and 15 days after the start of your tax year—can leave your business taxed as an LLC or C corporation, triggering double taxation on earnings and distributions. The IRS’s Revenue Procedure 2013-30 provides a streamlined process to request relief and make your S-corp election effective retroactively, so you can still enjoy pass-through taxation benefits.
What Is a Retroactive S Corp Election?
A retroactive (or “late”) S Corp election lets you designate a past tax year—up to 3 years and 75 days before the filing date—as the effective period for S-corporation treatment. This strategy can reduce self-employment taxes on profits and eliminate double taxation of dividends for that window.
Step 1: Get and Fill Out Form 2553
Download the form from the IRS:– Form 2553 PDF & instructions
Complete all sections except for the signature lines.
Collect signatures from all shareholders and officers once your attachments (reasonable cause statement and consents) are ready.
Step 2: Meet the Rev. Proc. 2013-30 Criteria
To qualify for automatic late-election relief, you must:
Be eligible to elect S-corp status on the intended effective date.
File within 3 years and 75 days of that date.
Have a reasonable cause for missing the original deadline.
Act promptly once you discover the error (IRS instructions).
On the first page of Form 2553, write at the top:
“FILED PURSUANT TO REV. PROC. 2013-30”
Step 3: Draft Your Reasonable Cause Statement
In Part I, Line I of Form 2553 (or on a separate attachment), explain why you missed the deadline. Your statement should cover:
Intent: You always planned to be an S Corp as of the effective date.
Timeliness: You’re filing within 3 years and 75 days of that date.
Cause of delay: E.g., reliance on an advisor who failed to file, illness, or natural disaster.
Corrective action: When you discovered the mistake and the steps you took immediately to file.
Example“XYZ LLC intended to be taxed as an S corporation effective January 1, 2022. Due to an oversight by our former accountant, Form 2553 was not submitted by March 15, 2022. Upon discovering this on April 10, 2025, we prepared and signed Form 2553 and all required attachments on April 12, 2025, to request late-election relief.”
Tip: Personalize the narrative to your situation and include supporting facts—payroll records, shareholder distributions, correspondence, etc.—to demonstrate you conducted business as an S Corp from the start of the retroactive period.
Step 4: Gather Shareholder Consents
Every person who was a shareholder during the retroactive year must sign a statement confirming they reported income consistent with S-corp treatment. This includes former shareholders if ownership changed during that period.
Step 5: Send to the IRS
Mail or fax the annotated Form 2553, your reasonable cause statement, and shareholder consents to the address or fax number in the Form 2553 instructions.
If mailing, use certified mail with return receipt to document the date sent and received.
Keep copies of everything for your records.
What Qualifies as “Reasonable Cause” for a late S corp election?
Valid reasons include:
Unfamiliarity with the separate election requirement.
Mistake or neglect by a third-party advisor.
Severe illness, death, or natural disaster.
Note: Simply seeking a tax advantage after the fact does not count as reasonable cause.
What to Expect Next
Processing time: Typically 2–5 months.
Confirmation: If approved, you’ll receive IRS Letter CP261. If you don’t get it within 60 days, you can call the IRS or request a verification letter (Form 385C).
Effective date: Once accepted, your S-corp status applies retroactively to the date you specified.
By following these five steps—downloading Form 2553, satisfying IRS relief rules, crafting a solid reasonable cause statement, collecting shareholder consents, and sending everything via certified mail—you can secure a retroactive S Corp election without costly private letter rulings.
Evin Wick JD, LLM is a Georgetown-trained tax lawyer and co-founder of Scorpu, where he channels two decades of small-business tax expertise into streamlined S-Corp, bookkeeping, and payroll solutions for solo consultants.
Comments