What Is IRS Form 2553?
IRS Form 2553 is used by eligible businesses to elect S corporation (S corp) tax status. By filing this form, a corporation or LLC chooses to be taxed under Subchapter S of the Internal Revenue Code rather than as a C corporation.
The election changes how income, losses, deductions, and credits are taxed, but it does not change the business’s legal structure.
What Is Form 2553 Used For?
Form 2553 is used to:
- Elect S corporation tax treatment
- Enable pass-through taxation to shareholders
- Avoid double taxation at the corporate level
- Define how business income is reported on owners’ returns
Once approved, the election generally applies until revoked or terminated.
Who Is Eligible to File Form 2553?
To qualify for S corp status, the business must generally:
- Be a domestic corporation or eligible LLC
- Have 100 or fewer shareholders
- Have shareholders who are individuals, certain trusts, or estates
- Have only one class of stock
- Not be an ineligible corporation (e.g., certain financial institutions)
Eligibility must be met at the time of election and maintained afterward.
When Should You File Form 2553?
Form 2553 is typically filed:
- Within 2 months and 15 days after the beginning of the tax year the election is to take effect, or
- At any time during the preceding tax year
Late elections may be accepted if the business qualifies for late S election relief.
IRS Notices This Form Is Commonly Used With
Issues related to Form 2553 may surface with IRS correspondence such as:
- CP261 – Confirmation of S corporation election acceptance
- Notices denying or questioning S election status
- Adjustment or audit letters related to entity classification
Form 2553 establishes tax status; notices typically follow to confirm or question the election.
When NOT to Use Form 2553
Do not use Form 2553 if:
- The business does not meet S corp eligibility rules
- You intend to be taxed as a C corporation
- You are changing entity type (formation documents handle that)
- You are electing partnership taxation (other elections apply)
Using the wrong election can create compliance issues.
What Information Is Required on Form 2553?
Form 2553 generally requires:
- Business name, EIN, and address
- Effective date of the S election
- Shareholder names, addresses, and ownership percentages
- Shareholder consent signatures
- Tax year selection information
All shareholders must consent to the election.
Where and How to File Form 2553
Form 2553 is filed by:
- Mailing or faxing the completed form to the IRS
- Using the appropriate IRS service center based on location
Some tax software may submit the election electronically.
What Happens After You File Form 2553?
After filing:
- The IRS reviews the election
- A confirmation notice (such as CP261) may be issued
- If accepted, the business is taxed as an S corporation going forward
- If denied, the IRS explains the reason and available options
Related IRS Forms
Forms commonly associated with S corporation elections include:
- Form 1120-S – U.S. Income Tax Return for an S Corporation
- Form 8832 – Entity Classification Election
- Form 941 / 940 – Payroll tax forms, if the business has employees
Summary
IRS Form 2553 allows eligible businesses to elect S corporation tax status. The election affects how income is taxed and reported but does not change the entity’s legal structure. Filing on time and meeting eligibility requirements are critical for approval.
Scope Note
This page explains the purpose and general use of IRS Form 2553. It does not provide legal or tax advice.