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New simplified filing method for late S corp elections

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in Small Business Tax

The S corporation has become, by far, the most popular type of business entity for small business owners. According to the latest reports, about 4 million businesses have elected S corp status.

What’s the attraction? Among other reasons, an S corp owner is protected against personal liability while income and gains are taxed only once, as opposed to the double taxation for regular C corporations.

Strategy: Jump on the S corp bandwagon. To be effective for the current tax year, you must make the election by filing Form 2553 by the 15th day of the third month of the tax year.

On the other hand, if you miss the boat, the IRS may throw you a lifeline. If it isn’t your fault, you can request permission to make a late election.

The IRS previously has provided guidance concerning the procedures for late S corp elections. Ordinarily, a private letter ruling had to be requested. But a new IRS ruling provides a simplified ...(register to read more)

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