How to fax Form 2553 to the IRS, S-corp election in 60 seconds

What is Form 2553?

Form 2553 is the IRS election form used by eligible domestic corporations and LLCs to be taxed as an S-corporation. S-corp status passes income, losses, deductions, and credits through to shareholders for federal tax purposes, avoiding double taxation while preserving liability protection.

Common reasons to file Form 2553:

• Save self-employment tax by paying yourself a "reasonable salary" plus distributions
• Pass-through taxation while keeping LLC or C-corp legal structure
• Qualify for the QBI deduction under Section 199A
• Simplify state tax compliance in many states

The 75-day deadline

Form 2553 must be filed within two months and 15 days (approximately 75 days) from the start of the tax year you want S-corp status to apply. Three common scenarios:

• New entity, calendar year: File by March 15 of the year you want S-corp status to begin
• Newly formed mid-year: File within 75 days of the date of incorporation or LLC formation
• Existing entity electing to be S-corp next year: File between October 1 and March 15 of the upcoming tax year

Eligibility, who can elect S-corp status?

To qualify, the entity must meet all of these requirements:

• Be a domestic corporation or eligible domestic LLC
• Have only allowable shareholders (individuals, certain trusts, estates, no partnerships, corporations, or non-resident aliens)
• Have 100 or fewer shareholders
• Have only one class of stock
• Not be an ineligible corporation (insurance company, financial institution using reserve method, certain DISCs)
• Adopt a permitted tax year (typically calendar year)

How to fill out Form 2553

Form 2553 has four parts. Most filers complete only Parts I and III.

Part I, Election Information

• Lines A-F: Entity name, address, EIN, date incorporated, state, and effective date of election
• Line G: If LLC, also check appropriate box
• Line H: Name and phone of officer or representative the IRS may contact
• Line I (Late election relief): Only complete if filing late, explain reasonable cause
• Line K: Tax year selection (calendar year, fiscal year, 52-53 week year)
• Shareholder consent statement: Each shareholder signs, lists their stock %, and acknowledges S-corp election

Part II, Selection of Fiscal Year (only if applicable)

Skip if you are using calendar year (most common).

Part III, QSST Election (only if applicable)

Used only if a Qualified Subchapter S Trust is a shareholder.

Fax vs. mail vs. attaching to 1120-S

What happens after you fax

Within approximately 60 days, the IRS sends a CP261 letter confirming acceptance, or a rejection notice with reasons. If approved, S-corp status applies retroactively to the effective date you elected.

Until you receive the CP261:

• Continue filing as if you are an S-corp (run payroll, take distributions accordingly)
• Keep the fax confirmation as proof of timely filing
• If 90 days pass with no response, call the IRS Business Line at 1-800-829-4933

Common mistakes to avoid

Wrong fax number for your state. Eastern states must use 855-887-7734; Western states must use 855-214-7520. Sending to the wrong center delays processing.

Missing shareholder signatures. Every shareholder must sign Part I. Missing signatures cause rejection.

Filing for an ineligible entity. If your entity has more than 100 shareholders, foreign owners, or multiple classes of stock, the election is invalid.

Wrong effective date. The effective date cannot be earlier than your incorporation date or your tax year start.

Forgetting late election relief request. If you are filing late, complete Part I Line I with reasonable cause, otherwise the election will be denied.

Sources

• About Form 2553, IRS.gov
• Form 2553 PDF, IRS.gov
• S-Corporations, IRS.gov
• Revenue Procedure 2013-30 (late election relief), IRS.gov

Frequently asked questions