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Late S-Corp Election Relief Explained

“S corporation” (often shortened to S Corp) is a tax designation that allows qualifying businesses to pass taxable income to their shareholders and thus avoid paying corporate taxes. To qualify as an S Corp, your company must meet certain restrictions and apply for S Corp status with the Internal Revenue Service (IRS) using Form 2553. There’s a strict time frame for S-Corp elections, but if you miss the deadline you can file for late S-Corp election relief.

What is S-Corp election?

Businesses must file a form with the IRS to elect S-Corp status by the 15th day of the second month of the taxable year. In other words, if you hope to file taxes with S-Corp status for 2021, you should have filed for S-Corp status by Feb. 15, 2021. If you missed the deadline but still hope to file your 2021 taxes as an S-Corp, you will have to file for late S-Corp election relief.

What is late S-Corp election relief?

According to Internal Revenue Code §1362(b)(5), you may qualify for late S-Corp election relief if “the Secretary determines that there was reasonable cause for the failure to timely make such election.” This may be due to an initial filing error, an internal mistake, or even a mistake made by the IRS.

You can scroll down to “Relief for Late Elections” on this IRS page for a full list of ways in which your business may qualify for late S-Corp election relief.

How do I get late S-Corp election relief?

To get late S-Corp election relief, file Form 2553 with the IRS, and in Box “I” make sure to explain your reason for requesting late S-Corp election relief.

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