You have been filing Forms 1120-S for years. Then the IRS sends a notice saying it has no record of your S election. Or you are cleaning up the books and realize nobody ever mailed the Form 2553. Either way, the question is the same: are you really a C corporation?
Not necessarily. Congress gave the IRS authority to treat a late election as timely, and the IRS has published a procedure that covers many of these situations without a private letter ruling. This guide explains how it works and what happens if you do not qualify.
The Deadline You Missed
Under IRC 1362(b)(1), an S election for a tax year can be made at any time during the preceding tax year, or during the tax year itself on or before the 15th day of the 3rd month. The Form 2553 instructions describe the same window as no more than 2 months and 15 days after the beginning of the tax year the election is to take effect.
Miss that window and IRC 1362(b)(3) treats an election made after the 15th day of the 3rd month as made for the following tax year. So a late election does not simply fail. It slides forward a year, which leaves the corporation a C corporation for the year you thought was covered. That is where the damage happens: a corporate level tax return and tax for a year you treated as a pass-through.
The Statutory Fix: IRC 1362(b)(5)
IRC 1362(b)(5) gives the IRS authority to treat a late election as timely. It applies if an election was made after the deadline, or no election was made at all, and the IRS determines there was reasonable cause for the failure to make the election on time. When the IRS grants relief, the election is treated as timely for the intended year.
The statute does not explain how to ask. Rev. Proc. 2013-30 does.
Rev. Proc. 2013-30: The Simplified Procedure
Rev. Proc. 2013-30, 2013-36 I.R.B. 173, remains the IRS procedure for late S corporation elections and related elections (including late QSub, ESBT, and QSST elections and certain late entity classification elections). It was amplified by Rev. Proc. 2022-19, not replaced. The IRS annual ruling procedure, Rev. Proc. 2026-1, continues to point taxpayers to Rev. Proc. 2013-30 as an alternative to the letter ruling process and states that it does not require payment of any user fee.
Who Qualifies
Under Rev. Proc. 2013-30 and the Form 2553 instructions, the main requirements for a late S election are:
- The entity intended to be an S corporation as of the intended effective date.
- The entity fails to qualify for S status for that date solely because Form 2553 was not timely filed.
- The request is made within 3 years and 75 days after the intended effective date.
- The corporation has reasonable cause for the failure to file on time and acted diligently to correct the mistake once it was discovered.
- The election includes statements from all shareholders during the period between the intended effective date and the date the late election is filed, stating that they reported their income on all affected returns consistently with the S election.
The "solely" requirement is the one that trips people up. If there was also an ineligible shareholder, a second class of stock problem, or a missing consent, the late filing is not the only defect, and you need to address the others too. See our guide to second class of stock and ineligible shareholders.
Past 3 Years and 75 Days
Section 5.04 of Rev. Proc. 2013-30 provides a path for corporations that have been filing as S corporations even if the 3 year, 75 day window has closed. As the Form 2553 instructions summarize it, the corporation must meet the other requirements, the corporation and all shareholders must have reported consistently with S status for all affected years, at least 6 months must have elapsed since the corporation filed its return for the first year the election was intended to be effective, and the IRS must not have notified the corporation or shareholders of a problem with S status within 6 months after that return was filed.
That last condition matters. If the IRS already sent a notice questioning your status within that 6 month window, this path is not available, and you are likely looking at a ruling request.
How To File
The Form 2553 instructions and Rev. Proc. 2013-30 set out the mechanics:
- Complete Form 2553, signed by an authorized officer and with all required shareholder consents.
- Write "FILED PURSUANT TO REV. PROC. 2013-30" at the top of the first page.
- Include the reasonable cause statement and the shareholder statements, with the required declaration under penalties of perjury.
- Either attach the election to a current or late filed Form 1120-S, or file it separately with the IRS service center. If it goes with the Form 1120-S, the instructions say the 1120-S itself should carry the notation "INCLUDES LATE ELECTION(S) FILED PURSUANT TO REV. PROC. 2013-30."
Your reasonable cause explanation should be specific. Who was supposed to file it, what happened, when you found out, and what you did next. A vague statement invites follow up questions.
LLCs That Never Filed Form 8832
Many S corporations are LLCs. An LLC is not a corporation by default, so it needs to be classified as an association before it can be an S corporation. Treas. Reg. 301.7701-3(c)(1)(v)(C) helps here. An eligible entity that timely elects S status is treated as having elected to be classified as an association, provided it meets the other small business corporation requirements.
When the S election itself is late, Rev. Proc. 2013-30 also covers the related late entity classification election. For broader classification problems, see our guide to LLC classification problems and Form 8832.
Other Situations That Look Like Late Elections
Rev. Proc. 2022-19 addresses several situations that do not need a private letter ruling:
- Missing acceptance letter. If you cannot find the IRS letter accepting your election (such as a CP261), section 3.04 says a missing acceptance letter does not impact the election. You can request a replacement through the IRS Business and Specialty Tax Line, or a practitioner can use the Practitioner Priority Service.
- Wrong return type. If a corporation with a valid election filed a Form 1065 or Form 1120 instead of Form 1120-S, section 3.05 says the inconsistent filing does not terminate the election. The corporation must file returns consistent with its actual status for open years.
- Missing consents and certain Form 2553 errors. Section 3.03 points to existing relief, including Rev. Proc. 2013-30 and Treas. Reg. 1.1362-6(b)(3)(iii), and allows certain other inadvertent errors on Form 2553 to be corrected by written explanation.
If the IRS has been treating your returns as missing or late because it has no S election on file, the corporation may also be facing filing penalties. See our guides to the Form 1120-S late filing penalty and catching up on unfiled 1065 and 1120-S returns.
If You Do Not Qualify
If Rev. Proc. 2013-30 does not fit, the procedure points entities that do not qualify to the private letter ruling process. The Form 2553 instructions note that a ruling request requires a user fee. The current ruling procedures and user fee schedule are in Rev. Proc. 2026-1, as modified and amplified by Rev. Proc. 2026-21. A ruling request takes longer, costs more, and requires a full factual presentation.
While relief is pending, keep everyone consistent. The corporation and every shareholder should keep reporting as if the election is valid. Inconsistent reporting can disqualify you from the simplified procedure.
Practical Steps
- Confirm with the IRS whether an election is on file and what effective date it shows.
- Pin down the intended effective date and measure the 3 year, 75 day window from it.
- Confirm that late filing is the only problem, with no ineligible shareholders and no second class of stock.
- Collect shareholder statements from everyone who held stock during the gap, including former shareholders.
- File the corrected election with a clear reasonable cause statement, and keep proof of mailing.
A missing Form 2553 is usually an administrative failure, not a substantive one. Treat it like one: fix it on paper, fix it completely, and fix it before the IRS decides what you are.
Frequently asked questions
What happens if I file Form 2553 late?
Under IRC 1362(b)(3), an election made after the 15th day of the 3rd month of the tax year is generally treated as made for the following tax year. That leaves the corporation a C corporation for the year you intended to cover, unless the IRS grants relief under IRC 1362(b)(5) to treat the election as timely, usually through Rev. Proc. 2013-30.
How long do I have to request late S election relief under Rev. Proc. 2013-30?
Generally 3 years and 75 days from the intended effective date of the election. Section 5.04 of Rev. Proc. 2013-30 allows relief after that window for corporations that filed consistently as S corporations, if all shareholders reported consistently, at least 6 months passed after the first year's return was filed, and the IRS did not raise an S status problem within that 6 months.
Is there a user fee for late S election relief?
Not under Rev. Proc. 2013-30. Rev. Proc. 2026-1, the IRS annual ruling procedure, states that relief under Rev. Proc. 2013-30 is in lieu of the letter ruling process and does not require payment of any user fee. If you do not qualify and must request a private letter ruling instead, a user fee applies under Rev. Proc. 2026-1.
I lost my S corporation acceptance letter. Is my election still valid?
A missing acceptance letter by itself does not affect a valid election. Section 3.04 of Rev. Proc. 2022-19 says a missing administrative acceptance letter does not impact an S election, and you can request a replacement through the IRS Business and Specialty Tax Line. The IRS will not issue a private letter ruling for a missing acceptance letter.
This guide is general information about federal tax law, not legal advice for your situation. Reading it does not create an attorney-client relationship.