Want to work with a pro on your late S corporation election? Email me at [email protected]! However, there are certain requirements necessary in order to qualify for this relief. Here they are. You must be requesting relief within three years and 75 days after the date you intend to be treated as an S corporation.
The only reason you fail to qualify as an S corporation is because the Form was not timely filed by its due date. In general, when you receive a notice from a taxing authority, the first thing you want to do is call them up. Sometimes, certain matters can be cleared up over the phone, and at the very least you may receive more helpful information than what was provided in the notice. So I called the IRS about this notice, and they told me that, sure enough, they had never received the Form In order to qualify for late election relief under Rev.
Looking for a Rev. Eligible corporations must also adhere to the following requirements:. The form is organized into 4 sections for those opting for S corporation election. An Employer Identification Number also known as an EIN , much like a Social Security Number, is a unique series of digits used to identify an entity for tax purposes and to prove identity.
It must include Social Security Numbers for these individuals or EINs if the shareholder is an estate or trust and a signed and dated consent statement. The Form should list the number of shares of stock each individual owns. Therefore, a husband and wife are both considered individual shareholders, even if the stock is owned in name or managed by only one spouse.
In Part 1, a business must also specify the tax year for which it would like the filing to take effect. The second section of IRS Form requires a business to provide information and evidence detailing its tax year if it does not operate on the calendar year for fiscal reporting purposes.
The business will need to justify its tax year as part of the submission e. A QSST is an estate planning tool put into effect when an S corporation shareholder passes away and their ownership transfers to a trust with a single beneficiary. If this is not applicable to your situation, you can skip this section. This final portion is necessary only if you file Form past the deadline.
Tardy submissions need to be explained in an attachment. Business owners can fill it out by typing directly into the form or by printing it out and completing it by hand. After your submission, you can expect a response back from the IRS within 90 days letting you know whether your S corporation status is approved.
This may take more time if you do not use the calendar year as your tax year. There is no fee to file Form However, special conditions may dictate a fee. For example, some businesses may be charged for using a non-traditional tax year. This fee should not be sent along with the initial form. If your circumstances necessitate a fee, the IRS will send you a bill.
Businesses can file Form either by fax or by mail. Form cannot be filed online. Form is due on the 15 th day of the 3 rd month of your tax year generally, the 75 th day of the tax year. If approved, your S corporation status is effective for 12 months after it is filed. Form will be filed within 3 years and 75 days of the date entered on line E of Form ; and. A corporation that meets requirements 1 through 4 must also be able to provide statements from all shareholders who were shareholders during the period between the date entered on line E of Form and the date the completed Form is filed stating that they have reported their income on all affected returns consistent with the S corporation election for the year the election should have been made and all subsequent years.
A corporation that meets requirements 1 through 3 but not requirement 4 can still request relief for a late election on Form if the following statements are true. The corporation and all its shareholders reported their income consistent with S corporation status for the year the S corporation election should have been made, and for every subsequent tax year if any ;.
At least 6 months have elapsed since the date on which the corporation filed its tax return for the first year the corporation intended to be an S corporation; and.
Neither the corporation nor any of its shareholders was notified by the IRS of any problem regarding the S corporation status within 6 months of the date on which the Form S for the first year was timely filed.
A late election to be an S corporation and a late entity classification election for the same entity may be available if the entity can show that the failure to file Form on time was due to reasonable cause. Relief must be requested within 3 years and 75 days of the effective date entered on line E of Form To request relief for a late election, an entity that meets the following requirements must explain the reasonable cause for failure to timely file the election and its diligent actions to correct the mistake upon discovery.
The entity is an eligible entity as defined in Regulations section The entity intended to be classified as an S corporation as of the date entered on line E of Form Timely filed all Forms S consistent with its requested classification as an S corporation, or. The entity has reasonable cause for its failure to timely file Form and has acted diligently to correct the mistake upon discovery of its failure to timely file Form The S corporation can provide statements from all shareholders who were shareholders during the period between the date entered on line E of Form and the date the completed Form is filed stating that they have reported their income on all affected returns consistent with the S corporation election for the year the election should have been made and all subsequent years.
Generally, send the original election no photocopies or fax it to the Internal Revenue Service Center listed below. However, certain late elections can be filed attached to Form S. See Relief for Late Elections , earlier.
Go to IRS. The PDS can tell you how to get written proof of the mailing date. The filing information shown above is subject to change. For the latest information, go to IRS. The service center will notify the corporation entity if its election is accepted and when it will take effect.
The corporation entity should generally receive a determination on its election within 60 days after it has filed Form If box Q1 in Part II is checked, the corporation entity will receive a ruling letter from the IRS that either approves or denies the selected tax year. When box Q1 is checked, it will generally take an additional 90 days for the Form to be accepted. Care should be exercised to ensure that the IRS receives the election. If the IRS questions whether Form was filed, an acceptable proof of filing is:.
A certified or registered mail receipt timely postmarked from the U. Postal Service, or its equivalent from a designated private delivery service see Notice , I. Do not file Form S for any tax year before the year the election takes effect. If the corporation entity is now required to file Form , U. Corporation Income Tax Return, or any other applicable tax return, continue filing it until the election takes effect.
Once the election is made, it stays in effect until it is terminated or revoked. IRS consent generally is required for another election by the corporation or a successor corporation on Form for any tax year before the 5th tax year after the first tax year in which the termination or revocation took effect.
Include the suite, room, or other unit number after the street address. If the corporation entity changed its name or address after applying for its employer identification number, be sure to check the box in item D of Part I. An EIN can be applied for in the following ways. Online—Go to IRS. The EIN is issued immediately once the application information is validated.
For more details, see the Instructions for Form SS Form generally must be filed no later than 2 months and 15 days after the date entered for item E. A corporation or entity eligible to elect to be treated as a corporation making the election effective for its first tax year in existence should enter the earliest of the following dates:.
When the corporation entity is making the election for its first tax year in existence, it will usually enter the beginning date of a tax year that begins on a date other than January 1.
A corporation entity not making the election for its first tax year in existence that is keeping its current tax year should enter the beginning date of the first tax year for which it wants the election to be effective. A corporation entity not making the election for its first tax year in existence that is changing its tax year and wants to be an S corporation for the short tax year needed to switch tax years should enter the beginning date of the short tax year.
It includes numerous technical questions, and while all are clearly labeled and explained, professional help could be necessary. Form can't be e-filed. You can mail in a paper copy of the original, or you can send it by fax to one of two numbers. The fax number will depend on the state where your corporation is located. The IRS provides a breakdown of which states should use which number on its website.
Likewise, the mailing address for Form depends on your state. There are two addresses , and the IRS cites which states should use which on its website. You can also file the form at any time during the tax year before the year in which you want the election to take effect.
You can file at any time after these deadlines if your corporation follows special rules for making a late S corporation election.
Here are some examples:. Form requires the signature of each shareholder, so leave yourself ample time to take care of this. A corporation can file Form after the due date and still receive IRS approval to make the election retroactive to the beginning of the corporation's tax year. Normally, if a corporation files Form after the 15th day of the third month of its tax year but before the 15th day of the third month of the following tax year, the IRS considers the S corporation election to be valid for the following tax year, but not valid for the preceding tax year.
The corporation must first make sure that it's eligible to make a late election. In addition to meeting S corporation eligibility criteria, it must have intended to be classified as an S corporation as of the intended effective date of the S corp election. The corporation can only have failed to qualify as an S corporation because it didn't file Form in a timely manner, and not for any other reason. A corporation must have reasonable cause for missing the deadline, but the IRS is pretty generous in this regard.
Inadvertently failing to file Form is considered reasonable cause. The corporation must also provide statements that each of its shareholders have reported their incomes in a manner inconsistent with the corporation's intention to file as an S corporation.
Attach a statement indicating that the corporation either had reasonable cause or inadvertently failed to file Form in a timely manner. Explain the circumstances in detail. The attached statement must be signed by each shareholder.
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