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The S corporation election deadline and who can elect

Form 2553 is due no more than 2 months and 15 days after the beginning of the tax year the election is to take effect, or at any time during the tax year before it. For a calendar-year company seeking the election for the next tax year, that deadline is March 15 of the election year.

Last checked against the official sources listed on this page.

Published by Vermilion Vitez LLC, which sells LLC formation and resells registered-agent service fulfilled by Registered Agents Inc.

The deadline rule

The IRS sets the deadline in two parts. Form 2553 is filed no more than 2 months and 15 days after the beginning of the tax year the election is to take effect, or at any time during the tax year preceding the tax year it is to take effect. The 2-month period starts on the day of the month the tax year begins and ends the day before the numerically corresponding day two calendar months later, plus 15 days.

Worked through for a calendar year

The IRS uses a calendar-year example. A company that has been filing as a C corporation and wants to be an S corporation for its next tax year beginning January 1 can file during the period that begins January 1 of its last year as a C corporation and ends March 15 of the year it wants to be an S corporation.

A company beginning its first tax year uses a different start date, the day it first had shareholders, assets, or began doing business, and the window runs from that date.

Who qualifies

An entity can elect S corporation status only if it meets all of the tests: it is a domestic corporation or a domestic entity eligible to elect corporation treatment; it has no more than 100 shareholders; its shareholders are only individuals, estates, certain exempt organizations, and certain trusts; it has no nonresident alien shareholders; it has one class of stock; it is not an ineligible corporation such as certain financial institutions or insurers; and each shareholder consents.

An LLC is an entity eligible to elect corporation treatment. The IRS says an eligible entity that meets the tests is treated as a corporation as of the effective date of its S corporation election and does not need to file Form 8832 as well.

If the deadline is missed

The IRS has a late-election relief process. It generally requires the entity to show reasonable cause for filing late and to have acted diligently once it found the problem, and it requires shareholder statements consistent with S corporation reporting. Relief in the standard case must be requested within 3 years and 75 days of the effective date entered on the form.

The state side is separate

The election above is federal. Forming the LLC is a state filing, and Vermilion Vitez sells LLC formation at $123.75 plus the state filing fee.

Related page on vermilionvitez.com: https://vermilionvitez.com/llc-formation

Official sources

FAQ

When is Form 2553 due for a calendar-year LLC?

No more than 2 months and 15 days after the start of the tax year the election should take effect, which for a calendar-year company is March 15, or any time during the prior tax year.

Can a single-member LLC elect S corporation status?

Yes, if it meets the tests. An LLC is an eligible entity, and one that meets the tests makes the election on Form 2553 without a separate Form 8832. The tests include shareholder type, shareholder count, one class of stock, and the consent of every shareholder.

Can a nonresident alien own an S corporation?

No. The IRS lists no nonresident alien shareholders as one of the eligibility tests, with a limited exception for potential current beneficiaries of an electing small business trust.

This page is general information about how a filing works, taken from the official sources listed above. It is not legal, tax, or financial advice, and it does not recommend any business structure. Confirm current forms, fees, and deadlines on the official source before you file.

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