Late S-Corp Election: Rev. Proc. 2013-30 Relief and Filing Steps

If you missed the deadline to elect S-corporation status, you can still file a late S-corp election by submitting Form 2553 with a reasonable cause statement, provided you’re within three years and 75 days of the effective date you wanted and your shareholders have been reporting income as if the election were already in place. Most businesses qualify for a simplified relief process under Revenue Procedure 2013-30, which avoids the expensive private letter ruling route.¹

The Window You Have to Fix It

A timely S-corp election has to be filed either during the tax year before the one it takes effect, or within two months and 15 days after the start of the year it covers.² For a calendar-year business, that’s March 15. For a newly formed entity, the clock starts the day of formation.³

Miss that date, and you have three years and 75 days from the intended effective date to seek simplified relief under Rev. Proc. 2013-30. Past that window, the only remaining option is a private letter ruling, which brings IRS user fees in the thousands and typically requires a tax attorney or CPA to prepare.

One nuance worth knowing: if you file Form 2553 after the standard deadline but before the 15th day of the third month of the following tax year, and you don’t ask for retroactive treatment, the election simply rolls forward to the next tax year. That isn’t a failed election, but you lose S-corp treatment for a full year. Late election relief is what you use when you want the election applied to the year you originally intended.

What You Have to Prove Under Rev. Proc. 2013-30

Simplified late relief has four conditions, and all of them have to be met:¹

The entity intended to be an S-corporation as of the requested effective date.
The relief request is filed within three years and 75 days of that effective date.
The only thing that went wrong was the missed Form 2553. If the entity also failed a structural requirement, this process won’t help.
You had reasonable cause for missing the deadline and acted promptly once you found the error.

Reasonable cause asks whether you exercised ordinary business care and still couldn’t file on time. Explanations that tend to hold up: an accountant or attorney who failed to file the form or never told you it was needed, a serious illness or death in the family, a natural disaster that disrupted business filings. Simple ignorance of the deadline is a weaker argument, though the IRS has accepted it when paired with other facts showing good faith.

The consistent treatment requirement is where these requests most often succeed or fail. Every shareholder who owned stock between the intended effective date and the day you file the late election must have reported income on every affected return as if the S-corp election were already in place. That means Form 1120-S returns (or at least the intent to file them), Schedule K-1s to shareholders, and pass-through income reported on each shareholder’s personal return.¹ A C-corp return filed in the interim, or shareholders who reported income inconsistently, will undermine the request.

Newly formed entities that haven’t filed anything yet have a cleaner path. There’s no inconsistency to worry about; you just have to file correctly going forward.

Confirm the Entity Actually Qualifies

Before you spend time on a relief package, check the structural requirements. The IRS will deny a late election no matter how strong your reasonable cause explanation is if the entity fails any of them.

The business has to be a domestic corporation or an LLC that has elected corporate tax treatment on Form 8832.⁴ It also has to satisfy every requirement in 26 U.S.C. § 1361: no more than 100 shareholders, no shareholders who are partnerships, corporations, or nonresident aliens, and only one class of stock.⁵ Allowable shareholders include individuals, certain trusts, and estates. Voting rights can differ across shares, but any difference in rights to distributions or liquidation proceeds violates the one-class-of-stock rule.

If any shareholder is a trust, that trust needs its own election. A Qualified Subchapter S Trust and an Electing Small Business Trust each have to file within two months and 16 days of receiving S-corp stock.¹ A missed trust election can seek relief under the same revenue procedure, but if left uncured it can invalidate or terminate the S-corp election for everyone.

What Goes in the Late Election Package

Four components, and a missing one can get the whole submission rejected or delayed.

Form 2553

Complete the form fully, including the intended effective date on Part I, Line E. That date sets when your S-corp status begins, so it matters. Make sure your EIN, incorporation date, and other entity details match your prior filings exactly. An authorized corporate officer signs the form.³

Reasonable Cause Statement

Attach a signed statement explaining specifically why the form wasn’t filed on time. Vague wording like “we weren’t aware” is weaker than a concrete narrative that identifies who was responsible for the filing, what stopped it from happening, and when you discovered the error. If you relied on a tax professional who dropped it, say so and name the professional. The statement should also affirm that the entity meets all S-corp eligibility requirements, including the shareholder limits and the one-class-of-stock rule.

Shareholder Consent Statements

Every person who held stock at any point between the intended effective date and the filing date has to sign a consent. Each one needs the shareholder’s name, address, taxpayer identification number, number of shares owned, and dates of ownership, plus confirmation that the shareholder reported income consistently with S-corp treatment on all affected returns. One missing consent can sink the request.

Form 8832 (LLCs Only)

If the entity is an LLC electing S-corp status, include a copy of the previously filed Form 8832 confirming the entity elected corporate tax treatment.⁶ If you haven’t filed Form 8832 yet, you can file it alongside Form 2553 and request late relief for both under Rev. Proc. 2013-30.

How and Where to Send It

You can mail the package or fax it. The IRS also allows certain late elections to be attached to the entity’s Form 1120-S return.³

If you mail it, send the original signed form (not photocopies) to the IRS service center for your principal business address. The correct address is in the Form 2553 instructions and on the IRS’s filing-location page.⁷ Use certified mail with return receipt requested. The postmark is your proof of filing date, which matters for the three-year-and-75-day window.

Faxing is faster and equally accepted. The IRS uses two numbers based on location: 855-887-7734 for businesses in the eastern half of the country (Maine down to Georgia and west to Wisconsin), and 855-214-7520 for businesses in the western and southern states (Alabama to Alaska to Wyoming).⁷ If you fax, keep the original with your records along with the fax confirmation page.

After You Submit

The IRS reviews your reasonable cause statement, checks the consistent treatment evidence, and confirms all shareholder consents are attached. Processing runs from several weeks to a few months. You won’t hear anything during the review unless the IRS wants more information.

If accepted, you’ll receive a determination letter confirming your S-corp status as of the effective date you requested on Line E. Keep that letter permanently. It’s your proof of S-corp status if the IRS or a state tax authority later questions your filing position.

If denied, the entity stays taxed under its default classification. The denial letter will state the reason, usually a failed eligibility requirement, inconsistent tax reporting, or an inadequate reasonable cause explanation. At that point, your only remaining option is a private letter ruling.

The Private Letter Ruling Fallback

Once more than three years and 75 days have passed since the intended effective date, simplified relief under Rev. Proc. 2013-30 is closed. The remaining option is a private letter ruling under 26 U.S.C. § 1362(b)(5), where the IRS has discretionary authority to treat a late election as timely when reasonable cause exists.²

This is a different process. The IRS user fee currently runs $3,450 for businesses with gross income under $400,000, $9,775 for those between $400,000 and $10 million, and $14,500 for larger entities. You’ll almost certainly need a tax attorney or CPA to prepare the request, adding several thousand more in professional fees. Ruling requests also take longer, sometimes six months or more. The legal standard is still reasonable cause, but the bar is effectively higher because you’re asking the IRS to exercise special authority in your case.

What’s at Stake If the Election Fails

A corporation that fails to obtain S-corp status defaults to C-corporation treatment, which brings double taxation. The entity pays federal income tax on profits at 21%, and shareholders pay a second layer when profits are distributed as dividends.⁸ Qualified dividends are taxed at 0%, 15%, or 20% depending on the shareholder’s income, and higher earners pay an additional 3.8% net investment income tax on top.⁹ C-corps also trap losses at the entity level, so early-year losses can’t flow through to shareholders’ personal returns.

An LLC that missed its S-corp election and never filed Form 8832 defaults to disregarded entity treatment if it has one member, or partnership treatment if it has more than one.⁶ Both are pass-through structures, so double taxation isn’t the issue. Self-employment tax is. Under default classification, all net business income is subject to self-employment tax at a combined 15.3% (12.4% Social Security up to the wage base, plus 2.9% Medicare on all earnings). With S-corp status, only the salary the owner pays themselves runs through payroll taxes; distributions above a reasonable salary do not. Over a few years, that difference is usually enough to justify the effort of curing the missed election.

1
Internal Revenue Service. Rev Proc 2013-30
2
Office of the Law Revision Counsel. 26 USC 1362 – Election, Revocation, Termination
3
Internal Revenue Service. Instructions for Form 2553
4
Internal Revenue Service. Frequently Asked Questions Regarding Limited Liability Company Classification
5
Office of the Law Revision Counsel. 26 USC 1361 – S Corporation Defined
6
Internal Revenue Service. About Form 8832, Entity Classification Election
7
Internal Revenue Service. Where to File Your Taxes for Form 2553
8
Internal Revenue Service. Topic No 404, Dividends and Other Corporate Distributions
9
Internal Revenue Service. Net Investment Income Tax