How Does A Corporation Request To File As An S Corporation?

To change an entity’s filing status from a C Corporation (filing Form 1120) to an S Corporation (filing Form 1120S), the entity will file Form 2553 – Election by a Small Business Corporation. The form can be either faxed or mailed to the appropriate IRS Service Center.

If the corporation wishes the election to take effect for the current year, it must be filed no more than 2 months and 15 days after the beginning of the tax year. Filing thereafter, the election will take effect the following tax year.

There are a number of tests to determine if the corporate entity is eligible to make the election. See the instructions for Form 2553 for a list of the eligibility requirements.

To be considered timely filed, Form 2553 must be signed and dated by a corporate officer authorized to sign, such as, for example, the president, vice president, treasurer, assistant treasurer, or chief accounting officer. An unsigned Form 2553 will not be considered timely filed.

Steps in the process:

1. Timely fax or mail Form 2553 with the appropriate IRS Service Center as directed in the Form 2553 instructions.
2. If approved, the corporation will receive a CP261 Notice from the IRS. If the notification of approval is not received, the corporation should follow-up with the Service Center where the Form 2553 was filed.
3. File the last C Corporation return (Form 1120) by the due date or extended due date. 
4. File the initial S Corporation return (Form 1120S) by the due date or extended due date. This filing will finalize the change of the entity’s filing requirement in the IRS’s records.

Additional Information:

Form 2553 – Election by a Small Business Corporation

IRS – Understanding Your CP261 Notice