What Is Form 2553?
IRS Form 2553 is the election form that a qualifying domestic corporation files to be treated as an S corporation for federal income tax purposes. The form is officially titled "Election by a Small Business Corporation" and represents one of the most significant tax elections available to small and mid-size businesses. By filing Form 2553, a corporation that would otherwise be taxed as a C corporation under Subchapter C of the Internal Revenue Code instead elects treatment under Subchapter S, fundamentally changing how the business and its owners are taxed.
The practical effect of the S election is the elimination of double taxation. A C corporation pays corporate income tax at 21% on its profits, and when those after-tax profits are distributed to shareholders as dividends, the shareholders pay a second layer of tax at their individual rates (typically 15% or 20% for qualified dividends, plus the 3.8% net investment income tax for higher earners). An S corporation, by contrast, passes its income directly to shareholders who report it on their individual returns, paying tax only once. For a profitable small business, this structural difference can save 20% to 30% or more of corporate profits in combined taxes annually.
Form 2553 is deceptively simple — it is only four pages and appears straightforward — but the consequences of errors or late filing are severe. A defective election can result in the corporation being treated as a C corporation for the entire tax year, triggering corporate-level tax and the need to amend returns for all shareholders. The filing deadline is strict, and while late election relief is available, it requires additional documentation and introduces uncertainty. Properly completing and timely filing Form 2553 is therefore essential for any business seeking S corporation status.
Eliminate Double Tax
Income passes through to shareholders and is taxed only once at individual rates.
75-Day Window
File within 2 months and 15 days of the tax year start for current-year effect.
100 Shareholder Limit
Maximum 100 shareholders with family members counted as one.
Form 2553 Preview
Department of the Treasury — Internal Revenue Service
Form 2553
Election by a Small Business Corporation
Part I — Election Information
Shareholder Consent
Signature of officer
Title
S Corporation Eligibility Requirements
Not every corporation qualifies for S election. IRC Section 1361 establishes strict eligibility criteria that must be met at the time of election and maintained continuously thereafter. Violating any requirement after the election is in effect results in automatic termination of S status, which cannot be re-elected for five years without IRS consent.
| Requirement | Rule | Key Details |
|---|---|---|
| Domestic Corporation | Must be organized under U.S. law | Includes LLCs electing corporate classification |
| Maximum Shareholders | 100 or fewer shareholders | Family members (6 generations) count as one |
| Eligible Shareholders | Individuals, estates, certain trusts | No partnerships, corporations, or nonresident aliens |
| One Class of Stock | Identical distribution and liquidation rights | Voting/non-voting differences are permitted |
| Ineligible Entities | Cannot be certain financial or insurance corps | Banks, insurance companies, DISCs are excluded |
The 75-Day Filing Rule
The timing of Form 2553 filing determines when the S election takes effect, making the filing deadline one of the most critical compliance dates for a new S corporation. The general rule under IRC Section 1362(b) requires the election to be filed during the tax year preceding the year the election is to take effect, or within the first two months and 15 days of the tax year for which it is to take effect. For a calendar-year corporation, this translates to a March 15 deadline for a January 1 effective date.
For newly formed corporations, the calculation is more nuanced. The two-month-and-15-day window begins on the earliest of: the date the corporation first has shareholders, the date it acquires assets, or the date it begins conducting business. If a corporation is formed on February 10 and first issues stock that same day, the 75-day window runs from February 10 through April 26 (75 days later). Filing within this window makes the election effective from February 10 — the beginning of the corporation's first tax year. Filing after April 26 but before the end of the tax year means the election takes effect the following January 1.
Pre-Election Year Shareholders
If the election is filed during the current tax year (not the prior year), all persons who held stock at any time during the portion of the tax year before the election was filed must consent — even if they no longer own stock when the form is filed. This requirement catches corporations off guard when a founding shareholder sold their stock before the election was filed. Obtaining the former shareholder's consent is often the most difficult logistical challenge in making a timely S election.
How to File Form 2553
Verify Eligibility Requirements
Before completing the form, confirm that the corporation meets all S corporation eligibility requirements: domestic organization, 100 or fewer eligible shareholders, no ineligible shareholder types (partnerships, corporations, nonresident aliens), one class of stock, and no prohibited business types. If the entity is an LLC, determine whether to file Form 8832 separately or use the combined election procedure under Revenue Procedure 2013-30.
Determine the Effective Date
Calculate whether you are within the two-month-and-15-day window for a current-year election. For existing corporations, the window runs from January 1 through March 15 for calendar-year filers. For newly formed entities, count 75 days from the earliest of first having shareholders, acquiring assets, or beginning business. If outside the window, the election will apply to the next tax year unless you qualify for late election relief.
Collect All Shareholder Consents
Every current shareholder and every person who held stock during the current tax year before the election date must sign the consent section of Form 2553 (Part I, Column K). In community property states, both spouses must consent. Each consent must include the shareholder's name, SSN or EIN, date of stock acquisition, number of shares owned, and signature. Missing even one required consent renders the election defective.
Complete Part I — Election Information
Enter the corporation's name, EIN, address, state of incorporation, and date incorporated. Specify the tax year election (calendar year or fiscal year). Enter the requested effective date. If the corporation has a fiscal year, complete Part II to request the fiscal year. List all shareholders with their consent information, share counts, and Social Security numbers.
Complete Optional Sections If Applicable
Part II applies if the corporation wants to adopt a fiscal year under Section 444 or requests a business purpose fiscal year. Part III applies if a qualified subchapter S trust (QSST) is a shareholder — the trust beneficiary must make a separate QSST election. Part IV applies if the corporation is making a late election under Revenue Procedure 2013-30 and needs to include a reasonable cause statement.
File the Form and Confirm Receipt
Mail or fax Form 2553 to the IRS service center designated for the corporation's principal business location (the addresses are listed in the form instructions). The IRS will send a determination letter (CP261) confirming the S election within 60 days. If you do not receive confirmation, contact the IRS Business and Specialty Tax Line (800-829-4933) to verify the election was received and processed. Keep a copy of the filed form and the IRS confirmation letter permanently in the corporation's records.
Late Election Relief
Missing the Form 2553 filing deadline does not necessarily mean waiting until the next tax year for S election to take effect. Revenue Procedure 2013-30 provides a simplified late election relief procedure that the IRS grants routinely when specific conditions are met. The key requirements are that the corporation intended to classify as an S corporation as of the intended effective date, the corporation had reasonable cause for failing to file timely, and the corporation and all shareholders have filed tax returns consistent with S corporation status for all years the election was intended to be effective.
To request late relief under Revenue Procedure 2013-30, the corporation files Form 2553 with "FILED PURSUANT TO REV. PROC. 2013-30" written at the top and includes a statement explaining the reasonable cause for the late filing. The form must be filed within three years and 75 days of the intended effective date. If this window has passed, the corporation may still request relief by applying for a private letter ruling from the IRS under IRC Section 1362(b)(5), which involves a user fee of $3,000 or more and a review period of several months. Common reasonable cause explanations that the IRS has accepted include reliance on a tax professional who failed to file, administrative oversight during entity formation, and the officer responsible for filing was unaware of the requirement.
Consistent Filing Requirement
Late election relief under Revenue Procedure 2013-30 requires that the corporation filed Form 1120-S (not Form 1120) for all years since the intended effective date, and all shareholders reported the S corporation income on their personal returns. If the corporation filed as a C corporation for any year, the simplified relief procedure is not available, and the corporation must pursue the more expensive private letter ruling route or accept C corporation treatment for those years.
Frequently Asked Questions
Official Resources
Authoritative IRS resources for electing S corporation status and filing Form 2553.
IRS - About Form 2553
Official IRS page for Form 2553 with the current form, instructions, and related information.
IRS - Form 2553 PDF
Downloadable PDF of the official IRS Form 2553 Election by a Small Business Corporation.
IRS - Form 2553 Instructions
Complete instructions for filing Form 2553 including eligibility requirements and where to file.
IRS - S Corporation Information
General IRS guidance on S corporation formation, operation, eligibility, and filing requirements.
Revenue Procedure 2013-30
IRS guidance on late S corporation election relief, including eligibility and filing procedures.
IRS - About Form 8832
Entity classification election form for LLCs seeking to elect corporate status before filing Form 2553.
Create Your Form 2553
Elect S corporation status with proper shareholder consent, eligibility verification, and timely filing to maximize your tax savings.
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