Eligible corporations, partnerships, and limited liability companies (LLCs) must complete Form 2553 in order to elect S corporation status for federal tax purposes. Due to the company’s profits being passed through to the shareholders’ individual tax returns, the S corporation classification enables the business to avoid double taxation. The form must be submitted on time, though, or the business risked losing the chance to choose S corporation status.
It’s critical to ascertain your LLC’s status as a S or C corporation before submitting Form 2553. If an LLC has one member, it is automatically treated as a disregarded entity for tax purposes; if it has two or more members, it is treated as a partnership. However, by submitting Form 2553 to the IRS, an LLC might choose to be taxed as a S corporation. Depending on the number of members, an LLC will either be taxed as a partnership or a disregarded company if it chooses not to elect S corporation status.
To qualify as a corporation for tax purposes, a single member LLC that wishes to elect S corporation status must first file Form 8832. Then, within 75 days of the commencement of the tax year for which it wants to be taxed as a S corporation, the LLC must submit Form 2553. If the LLC misses the deadline, it may still file Form 2553 by making a relief request under Revenue Procedure 2013-30 up to 3 years and 75 days from the intended effective date of the S corporation election.
The IRS accepts submissions through fax and mail for Form 2553. Fax submissions, however, are typically quicker and more dependable than mail ones. Keep a copy of the fax confirmation receipt as proof of submission if you decide to fax the form. To ensure that the form is received and processed by the IRS, utilize certified mail with return receipt requested if you decide to mail it.
To prevent losing the chance to choose S company status, it is critical to submit Form 2553 as soon as possible. The Revenue Procedure 2013-30 may provide relief if the deadline is missed, nevertheless. Make sure to ascertain whether your LLC is a S or C corporation before submitting the form and take the necessary actions to opt S corporation status. Fax submissions of the form are typically quicker and more dependable than mail submissions.
You have a choice of sending documents to the IRS via mail, fax, or electronic filing. You can either mail your documents to the IRS at the address listed on their website, or you can fax them to the IRS at the number listed on the website. You can also submit your documents electronically utilizing the IRS’s e-file system. Depending on the kind of document you are delivering and the IRS’s preference, you should utilize a particular technique.