You can revoke an S corporation election retroactively only in one narrow sense: a revocation filed on or before March 15 of the current tax year can take effect on January 1 of that same year. That is the furthest back federal law lets a voluntary revocation reach. You cannot undo S status for a tax year that has already closed, and a statement filed after March 15 will land somewhere later in the calendar rather than at the start of it.
The Only Retroactivity the Statute Allows
A revocation made on or before the 15th day of the third month of the tax year takes effect on the first day of that tax year.1Office of the Law Revision Counsel. 26 USC 1362 – Election; Revocation; Termination For a calendar-year corporation that means a revocation filed by March 15 can specify January 1 of the same year as the effective date.2Internal Revenue Service. Revoking a Subchapter S Election The Treasury Regulations use the same threshold, treating a revocation made before the 16th day of the third month as effective on the first day of the taxable year.3eCFR. 26 CFR 1.1362-2 – Termination of Election
Nothing in the statute reaches further back. A corporation that wants its 2026 income taxed under C corporation rules from January 1 forward must get the revocation statement to the IRS by March 15, 2026. Miss that window and the earliest full-year revocation takes effect January 1, 2027. Prior-year revocation is simply not on the menu.
Drafting the Revocation Statement
There is no numbered IRS form for this. The corporation prepares a written statement and mails it to the IRS service center where it files its annual return.2Internal Revenue Service. Revoking a Subchapter S Election The statement must contain three things:
- A clear declaration that the corporation is revoking its election under Section 1362(a).
- The total number of issued and outstanding shares, counting both voting and non-voting stock, as of the date the revocation is made.
- The intended effective date. For current-year retroactive treatment, this is January 1 of the tax year.
The corporation’s president, treasurer, or another principal officer signs it. The details are not decorative. Leaving out the share count, for instance, keeps the IRS from confirming that the required shareholder majority actually consented.
Shareholder Consent
The revocation is valid only if shareholders holding more than half of all issued and outstanding shares consent, with voting and non-voting shares both counted.1Office of the Law Revision Counsel. 26 USC 1362 – Election; Revocation; Termination Consent has to be given on the day the revocation is made. It can appear on the statement itself or on separate documents attached to it. Each consenting shareholder must provide name, address, taxpayer identification number, and share count.2Internal Revenue Service. Revoking a Subchapter S Election
If you cannot gather consents from holders of more than 50 percent of the shares, the revocation fails.
Community Property States
When stock is community property, or the income from the stock is community property, each person with a community interest must consent, even if only one spouse’s name appears on the certificate.4eCFR. 26 CFR 1.1362-6 – Elections and Consents The regulation was written for S elections and the IRS applies the same logic to revocations. Missing a spouse’s signature is a common failure mode in states like California, Texas, and Arizona.
Filing the Revocation on Time
Mail the package to the IRS service center where the corporation files its annual return. There is no electronic filing portal for revocation statements. Physical mail is the only option.
Certified mail or a designated private delivery service is not legally required, but it is the only practical way to prove you filed on time. The postmark date is the official filing date, so a March 14 postmark establishes that you beat the deadline even if the envelope arrives a week later. Regular first-class mail leaves you with no proof if the IRS later says it received nothing, or received it late.
Keep a full copy of the revocation statement, every shareholder consent, and the mailing receipt. The IRS typically sends an acknowledgment letter confirming the termination. If nothing arrives within 60 days, follow up with the service center. Do not file the next return as a C corporation on Form 1120 until you have confirmation that the revocation was accepted.
If You Miss March 15
A revocation filed after the 15th day of the third month cannot reach back to the start of the year. What it can do depends on whether the statement names an effective date.
If the late statement specifies no date, the revocation defaults to the first day of the next tax year. A calendar-year corporation that files on June 10, 2026, without naming a date will not see the revocation take effect until January 1, 2027.1Office of the Law Revision Counsel. 26 USC 1362 – Election; Revocation; Termination
If the statement specifies a date on or after the day the revocation is filed, the revocation takes effect on that specified date.5Office of the Law Revision Counsel. 26 USC 1362 – Election; Revocation; Termination A statement filed on June 10, 2026, could name June 10, 2026 as the effective date. The tax year then splits into an S short year ending the day before the revocation and a C short year beginning on the revocation date.
How the Split Year Is Allocated
The default is a pro-rata allocation: each item of income and deduction is spread evenly across every day of the full year, then divided between the two short periods.6eCFR. 26 CFR 1.1362-3 – Treatment of S Termination Year Simple, but distorting when income was concentrated in one half of the year. The corporation can instead elect to allocate based on its normal accounting methods, using the actual books for each short period. That election requires the consent of every person who was a shareholder during the S short year and every shareholder on the first day of the C short year.1Office of the Law Revision Counsel. 26 USC 1362 – Election; Revocation; Termination Pro-rata also does not apply if 50 percent or more of the stock changes hands during the termination year.
What Comes After the Revocation
Once the revocation takes effect, the corporation files Form 1120 and pays corporate income tax at the flat 21 percent federal rate.7Internal Revenue Service. About Form 1120 Shareholders no longer receive Schedule K-1s. They are taxed only when the corporation distributes earnings as dividends, reported on Form 1099-DIV.8Internal Revenue Service. About Form 1099-DIV, Dividends and Distributions Double taxation returns: the corporation pays tax on its income, and shareholders pay again on distributions.
The Post-Termination Transition Period
After the S election ends, a post-termination transition period (PTTP) gives shareholders a limited window to withdraw previously taxed earnings without dividend treatment. The PTTP begins the day after the last day of the final S corporation tax year and ends on the later of one year after that day or the extended due date for the final S corporation return.9eCFR. 26 CFR 1.1377-2 – Post-Termination Transition Period During the PTTP, cash distributions reduce each shareholder’s stock basis to the extent they do not exceed the Accumulated Adjustments Account, which tracks income already taxed to shareholders during the S corporation years. Those distributions are not taxed again. Once the PTTP closes, remaining AAA generally loses its special treatment for most corporations, and later distributions follow normal C corporation dividend rules. Planning distributions before the window closes is critical.
The Five-Year Lock on Re-Electing
After a revocation the corporation cannot make a new S election for five tax years without IRS consent. The waiting period runs from the first tax year in which the revocation was effective, and the earliest the corporation can re-elect is the fifth tax year after that.1Office of the Law Revision Counsel. 26 USC 1362 – Election; Revocation; Termination A corporation revoking effective January 1, 2026 could not re-elect until the tax year beginning January 1, 2031 at the earliest.
The IRS can waive the five-year rule, but approval is not automatic. The agency looks more favorably on requests where ownership has changed substantially since the revocation, the circumstances that prompted the revocation no longer exist, and the re-election is not being used to manipulate tax years. Early re-election requires a private letter ruling, with filing fees and significant processing time. The five-year rule makes the revocation a commitment rather than an experiment, and it is worth weighing that before dropping the envelope in the mail on March 14.