IRS Form 2553

Practical overview

Form 2553 is timing-sensitive: the election generally must be filed no more than two months and fifteen days after the start of the tax year the election is to take effect. Late elections require relief under Rev. Proc. 2013-30 with a reasonable cause explanation. Founders frequently miss the shareholder-consent signatures or attempt to elect with an ineligible shareholder, both of which void the election.

Practical steps

• Confirm eligibility: domestic entity, 100 or fewer shareholders, only allowable shareholder classes, single class of stock.
• Gather signed shareholder consents covering all shareholders during the applicable period.
• Choose the effective date of the election and matching tax year (Part II if a fiscal year is requested).
• File by fax to the appropriate IRS service center or by paper; do not file with Form 1120-S.
• If filing late, attach the late-election reasonable cause statement under Rev. Proc. 2013-30.

Due-date notes

Penalty snapshot

No direct monetary penalty; a late or invalid election typically results in the entity being taxed as a C corporation for that tax year unless late-election relief is granted.