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Download IRS 2553 Form in PDF

The IRS Form 2553 is a document used by small businesses to elect to be taxed as an S corporation. This election allows the business to pass income, losses, deductions, and credits through to shareholders for federal tax purposes. Understanding the requirements and implications of this form is essential for business owners looking to optimize their tax situation.

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Contents

The IRS 2553 form plays a crucial role for businesses looking to elect S Corporation status, which can offer significant tax benefits. This form allows eligible corporations to avoid double taxation on corporate income, instead passing income directly to shareholders, who then report it on their personal tax returns. Filing the form is not just a matter of paperwork; it requires careful attention to detail and adherence to specific deadlines. Corporations must meet certain eligibility criteria, including limits on the number of shareholders and types of stock issued. Additionally, the form must be filed within a specific timeframe, typically within 75 days of the corporation's formation or by March 15 of the tax year for existing corporations. Understanding the nuances of the IRS 2553 form is essential for business owners who wish to maximize their tax efficiency while complying with federal regulations.

Preview - IRS 2553 Form

Note: Form 2553 begins on the next page.

Where To File Form 2553 after 6/17/19

If the corporation’s principal business, office,

or agency is located in

Use the following address

or fax number

Connecticut, Delaware, District of Columbia,

Georgia, Illinois, Indiana, Kentucky, Maine,

Maryland, Massachusetts, Michigan, New

Hampshire, New Jersey, New York, North Carolina,

Ohio, Pennsylvania, Rhode Island, South Carolina,

Tennessee, Vermont, Virginia, West Virginia,

Wisconsin

Department of the Treasury

Internal Revenue Service

Kansas City, MO 64999

Fax # 855-887-7734

Alabama, Alaska, Arizona, Arkansas, California,

Colorado, Florida, Hawaii, Idaho, Iowa, Kansas,

Louisiana, Minnesota, Mississippi, Missouri,

Montana, Nebraska, Nevada, New Mexico, North

Dakota, Oklahoma, Oregon, South Dakota, Texas,

Utah, Washington, Wyoming

Department of the Treasury

Internal Revenue Service

Ogden, UT 84201

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)

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You can fax this form to the IRS. See separate instructions.

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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

Type

Name (see instructions)

Number, street, and room or suite no. If a P.O. box, see instructions.

City or town, state or province, country, and ZIP or foreign postal code

A Employer identification number

B Date incorporated

C State of incorporation

Check the applicable box(es) if the corporation (entity), after applying for the EIN shown in A above, changed its

name or

address

E Election is to be effective for tax year beginning (month, day, year) (see instructions) . . . . . .

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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.

F Selected tax year:

(1)

Calendar year

(2)

Fiscal year ending (month and day)

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(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

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If box (2) or (4) is checked, complete Part II.

If 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)

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Name and title of officer or legal representative whom the IRS may call for more information

Telephone number of officer or legal

representative

I If 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.

Sign

Here

Under penalties of perjury, I declare that I have examined this election, 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.

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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.

Name and address of each

shareholder or former shareholder

required to consent to the election.

(see instructions)

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.

Stock owned or

percentage of ownership

(see instructions)

Number of

shares or

percentage

of ownership

Date(s)

acquired

Social security

number or

employer

identification

number (see

instructions)

Shareholder’s

tax year ends

(month and

day)

Signature Date

Form 2553 (Rev. 12-2017)

Page 3

Name Employer identification number

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:

A new corporation adopting the tax year entered in item F, Part I.

An existing corporation retaining the tax year entered in item F, Part I.

An existing corporation changing to the tax year entered in item F, Part I.

Complete 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

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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

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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.

Q Business 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

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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

2. Check here

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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

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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.

R Section 444 Election—To make a section 444 election, check box R1. You may also check box R2.

1. Check here

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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

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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.

Form 2553 (Rev. 12-2017)

Page 4

Name Employer identification number

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 Employer identification number

Date on which stock of the corporation was transferred to the trust (month, day, year) . . . . . . . .

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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

Date

* 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.

1 The requesting entity is an eligible entity as defined in Regulations section 301.7701-3(a);

2 The requesting entity intended to be classified as a corporation as of the effective date of the S corporation status;

The 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);

The 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

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

The 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.

Form 2553 (Rev. 12-2017)

▼ PDF

Document Specifics

Fact Name	Details
Purpose	The IRS Form 2553 is used by eligible small businesses to elect S Corporation status for federal tax purposes.
Eligibility	To qualify, a business must be a domestic corporation with 100 or fewer shareholders, all of whom must be individuals, certain trusts, or estates.
Filing Deadline	The form must be filed within 75 days of the beginning of the tax year when the election is to take effect.
State Requirements	Many states have their own forms for S Corporation elections. For example, California requires Form 100S.
Governing Law (Federal)	The election is governed by the Internal Revenue Code, specifically Section 1362.
Revocation	An S Corporation can revoke its status by filing a statement with the IRS, which must be signed by shareholders holding more than 50% of the stock.
Tax Benefits	Electing S Corporation status allows income to pass through to shareholders, avoiding double taxation at the corporate level.
Form Availability	The IRS Form 2553 can be downloaded from the IRS website or obtained through tax professionals.

IRS 2553: Usage Instruction

Filling out the IRS 2553 form is an important step for small businesses looking to elect S corporation status. This process requires attention to detail, so take your time to ensure everything is accurate. Once the form is completed, it will be submitted to the IRS for approval.

Gather necessary information, including your business name, address, and Employer Identification Number (EIN).
Indicate the tax year the election is to take effect.
Complete the section for shareholders, including their names, addresses, and percentage of stock ownership.
Provide the date of incorporation or formation of your business.
Sign and date the form. Ensure that all shareholders also sign if required.
Make a copy of the completed form for your records.
Mail the form to the appropriate IRS address based on your location.

Learn More on IRS 2553

What is IRS Form 2553?

IRS Form 2553 is a tax form used by eligible small businesses to elect to be treated as an S Corporation for federal tax purposes. This election allows the business to avoid double taxation, meaning that income is only taxed at the shareholder level rather than at both the corporate and individual levels.

Who is eligible to file Form 2553?

To be eligible to file Form 2553, a business must meet several criteria:

It must be a domestic corporation.
It can have no more than 100 shareholders.
All shareholders must be individuals, certain trusts, or estates. Partnerships and corporations cannot be shareholders.
It must have only one class of stock.
All shareholders must consent to the S Corporation election.

When should Form 2553 be filed?

Form 2553 should be filed within two months and 15 days after the beginning of the tax year the election is to take effect. If you miss this deadline, you may still be able to make the election by providing a reasonable cause statement and filing the form as soon as possible.

What information is required on Form 2553?

Form 2553 requires the following information:

The name and address of the corporation.
The Employer Identification Number (EIN) of the corporation.
The date of incorporation.
The tax year the corporation uses.
Shareholder information, including names, addresses, and percentage of ownership.

What happens after filing Form 2553?

After filing Form 2553, the IRS will review the application. If approved, the corporation will be recognized as an S Corporation, and the election will take effect as specified on the form. The IRS will send a confirmation letter to the corporation once the election is granted.

Can Form 2553 be revoked?

Yes, a corporation can revoke its S Corporation status by filing a statement with the IRS. This revocation can be done voluntarily by the shareholders or may occur automatically if the corporation no longer meets the eligibility requirements. A majority of shareholders must consent to the revocation.

What are the tax benefits of filing Form 2553?

Filing Form 2553 allows a corporation to be taxed as an S Corporation, which provides several tax benefits:

Avoidance of double taxation on corporate income.
Pass-through taxation, where income is reported on shareholders' personal tax returns.
Potential savings on self-employment taxes for shareholders who work in the business.

What are the potential drawbacks of being an S Corporation?

While there are benefits, there are also drawbacks to consider. These include:

Restrictions on the number and type of shareholders.
Increased scrutiny from the IRS regarding reasonable compensation for shareholder-employees.
Limitations on certain deductions and credits available to C Corporations.

Is there a fee to file Form 2553?

No, there is no fee to file IRS Form 2553. However, businesses may incur costs if they seek professional assistance in preparing the form or if they need to address any issues that arise during the election process.

Where can I find IRS Form 2553?

IRS Form 2553 can be downloaded directly from the IRS website. It is available in PDF format, allowing for easy printing and completion. Additionally, instructions for filling out the form are also provided on the IRS website to assist businesses in the election process.

Common mistakes

Filling out the IRS Form 2553 can be a daunting task for many business owners. One common mistake is failing to meet the filing deadline. The IRS requires that Form 2553 be submitted within a specific timeframe, typically within two months and 15 days of the beginning of the tax year. Missing this deadline can result in the loss of S corporation status for the entire year, which can have significant tax implications.

Another frequent error involves incorrect shareholder information. Each shareholder must consent to the S corporation election by signing the form. If a shareholder's name, address, or Social Security number is incorrect, the IRS may reject the application. This can lead to delays and complications in processing, ultimately affecting the business's tax status.

Many individuals also overlook the importance of accurately identifying the tax year. Form 2553 requires the business to specify its tax year, which should align with the business's accounting period. If this is not done correctly, it can lead to issues with tax reporting and compliance. The IRS expects consistency in tax year selection, and discrepancies can raise red flags.

Lastly, failing to understand the eligibility requirements for S corporation status is a critical mistake. Not all businesses qualify, and certain restrictions apply, such as the number of shareholders and the types of stock issued. It’s essential to review these requirements before submitting the form. If the business does not meet the criteria, the election will not be valid, potentially leading to unexpected tax liabilities.

Documents used along the form

The IRS Form 2553 is used by small business corporations to elect to be taxed as an S corporation. This form is essential for businesses seeking to benefit from pass-through taxation, which can help avoid double taxation on corporate income. However, several other documents may also be necessary to complete the election process and ensure compliance with tax regulations. Below is a list of commonly used forms and documents that complement the IRS 2553.

IRS Form 1120S: This is the U.S. Income Tax Return for an S Corporation. It must be filed annually to report income, deductions, and other tax information for the corporation.
IRS Form 941: Employers use this form to report income taxes, Social Security tax, and Medicare tax withheld from employee's paychecks. It is filed quarterly.
IRS Form W-2: This form reports an employee's annual wages and the taxes withheld from their paycheck. Employers must provide this form to employees by January 31 each year.
IRS Form W-3: This is a summary form that accompanies Form W-2 when submitted to the IRS. It provides a total of all W-2 forms issued by the employer.
State Election Forms: Some states require additional forms to elect S corporation status at the state level. These forms vary by state and should be checked for specific requirements.
Operating Agreement: While not always mandatory, this document outlines the management structure and operating procedures of the corporation. It can help clarify roles and responsibilities among shareholders.
Bylaws: Bylaws serve as the internal rules governing the corporation. They detail the procedures for meetings, voting, and the responsibilities of officers and directors.

Understanding these documents can help ensure a smooth process when electing S corporation status and maintaining compliance with tax obligations. Each form plays a distinct role in the overall functioning of the business and its relationship with tax authorities.

Similar forms

The IRS Form 8832, also known as the Entity Classification Election, shares similarities with Form 2553. Both forms allow businesses to choose how they want to be taxed. While Form 2553 is specifically for S Corporations, Form 8832 can be used by various types of entities, including partnerships and limited liability companies. Each form requires the entity to provide information about its structure and the owners, ensuring that the IRS has the necessary details to process the election appropriately.

Another related document is Form 1065, the U.S. Return of Partnership Income. This form is used by partnerships to report their income, deductions, and other financial information. Like Form 2553, it requires detailed information about the business and its owners. While Form 2553 is about electing S Corporation status, Form 1065 is focused on reporting income for partnerships. Both forms play a crucial role in determining how the business will be taxed and the responsibilities of its owners.

Form 1120 is the U.S. Corporation Income Tax Return, which is similar to Form 2553 in that it is used by corporations to report their income. However, Form 1120 is for C Corporations, which are taxed separately from their owners. Both forms require comprehensive financial information, but the key difference lies in the tax treatment. While Form 2553 allows for pass-through taxation under S Corporation status, Form 1120 subjects the corporation to double taxation.

Form 941, the Employer's Quarterly Federal Tax Return, also has a connection to Form 2553. While Form 2553 is about electing S Corporation status, Form 941 is used to report payroll taxes. S Corporations must file Form 941 to report income taxes withheld from employee wages and the employer's share of Social Security and Medicare taxes. Both forms are important for compliance with IRS regulations, but they serve different purposes in the tax reporting process.

Lastly, Form 1065-B, the U.S. Return of Income for Electing Large Partnerships, is another document that relates to Form 2553. Like Form 2553, it is used for entities that choose a specific tax treatment. Form 1065-B is designed for large partnerships that elect to be taxed as partnerships but with certain modifications. Both forms require similar information about the entity and its owners, ensuring that the IRS has the necessary details to process the election and tax returns accurately.

Dos and Don'ts

When filling out the IRS 2553 form, attention to detail is crucial. Here are some key dos and don'ts to keep in mind:

Do ensure that all information is accurate and complete.
Do file the form within the required timeframe to avoid penalties.
Don't forget to have all shareholders sign the form.
Don't submit the form without reviewing it for errors.

Misconceptions

The IRS Form 2553 is an important document for small businesses electing to be taxed as an S Corporation. However, several misconceptions surround this form. Below is a list of ten common misunderstandings.

Only large businesses can file Form 2553. Many believe that only larger corporations can benefit from S Corporation status. In reality, any eligible small business can file this form.
Form 2553 can be filed at any time. Some think they can submit this form whenever they choose. However, there are specific deadlines that must be met to ensure the election is effective for the desired tax year.
All businesses can qualify for S Corporation status. Not every business can elect S Corporation status. There are eligibility criteria, including limitations on the number of shareholders and types of stock.
Filing Form 2553 guarantees S Corporation status. Simply submitting the form does not automatically grant S Corporation status. The IRS must approve the election, and all requirements must be met.
Form 2553 is only for new businesses. Many believe that only newly formed companies can file this form. Existing corporations can also elect S Corporation status by submitting Form 2553.
There is no penalty for late filing. Some individuals think there are no consequences for filing Form 2553 late. However, late elections may result in the loss of S Corporation status for that tax year.
All shareholders must be U.S. citizens. While it is true that S Corporations have restrictions on shareholders, not all shareholders must be U.S. citizens. Certain types of entities can also hold shares.
Form 2553 requires extensive documentation. Many assume that filing this form requires a large amount of paperwork. In fact, the form itself is relatively straightforward and can be completed without extensive documentation.
Once filed, the election cannot be revoked. Some believe that once Form 2553 is submitted and accepted, the election is permanent. In reality, businesses can revoke their S Corporation status by following specific procedures.
All income is taxed at the corporate level. There is a misconception that S Corporations are taxed like regular corporations. In fact, S Corporations are pass-through entities, meaning income is typically taxed only at the individual level.

Understanding these misconceptions can help business owners make informed decisions about their tax status and the use of Form 2553.

Key takeaways

When filling out and using the IRS Form 2553, which is used to elect S Corporation status, there are several important points to keep in mind. Here are key takeaways to consider:

Eligibility Requirements: Before submitting Form 2553, ensure that your business meets the eligibility criteria to elect S Corporation status. This includes having no more than 100 shareholders and being a domestic corporation.
Filing Deadline: The form must be filed within a specific timeframe. Generally, it should be submitted by the 15th day of the third month after the beginning of the tax year for which the election is to take effect.
Shareholder Consent: All shareholders must consent to the S Corporation election. This is typically done by signing the form, so it's important to gather their agreement before submission.
Accurate Information: Ensure that all information provided on the form is accurate and complete. Mistakes or omissions can lead to delays or rejection of the election.
State Considerations: Some states have their own requirements regarding S Corporation elections. Check state-specific regulations to ensure compliance at both federal and state levels.