Relief for Late S Corporation Elections: Revenue Procedure 2013-30, Reasonable Cause, and Form 2553

A Subchapter S election must be filed no more than two months and 15 days after the beginning of the tax year the election is to take effect, or at any time during the tax year preceding the tax year it is to take effect. Generally, for calendar year taxpayers, the election must be filed on or before March 15th following the tax year. This valuable election can help businesses avoid double taxation, reduce payroll taxes, and deduct initial or other operating losses.

Similarly, a missed, untimely filed, or improperly prepared Form 2553, Election by Small Business Corporation, can prove costly. A new business may be formed without consulting a tax professional, a deadline may be missed, or reviewing an initial year's return could create the need for S corporation status in retrospect. Fortunately, such curative relief is provided in Revenue Procedure 2013-30. General requirements must be met, including requesting relief within three years and 75 days from the effective date of the election. Also, the taxpayer must have and disclose reasonable cause for requesting late relief.

Listen as our panel of S corporation experts discusses properly preparing and filing Form 2553, relief available for missed, late, or improperly filed elections, and what constitutes reasonable cause when requesting this tax-saving status.