What if I missed the S election deadline?

Okay, making an S election after the deadline passes is a pretty common mistake.

The election to be treated as an S corporation needs to be made by the 15th day of the third month in the tax year.

Most S corporations use a calendar tax year, so, in practice, the S election deadline is March 15. In other words, in order to be an S corporation for the 2017 tax year, the business needs to file its election by March 15, 2017. So, that's the rule.

How and Where People Goof

Not surprisingly, however, many people think they can wait until the end of the tax year. And some business owners get confused and think their attorney or accountant has already filed a timely S election. And so, commonly, many times businesses find they've missed the S election deadline.

IRS Usually Forgives Lateness

So here's the good news: While the tax laws are very clear on this deadline, it turns out that you often can make a late election if you've got a decent excuse. Something along the lines of "I understood my attorney or accountant was taking care of this, but he dropped the ball..." seems to work pretty well.

Late Election Relief Procedure

However, filing a late S corporation probably isn't a do-it-yourself project. Sorry.

You need to follow the correct, current IRS procedure for making a late election. The correct, current procedure is described (as of August 2, 2016) in Revenue Procedure 2013-30, "Simplified method for taxpayers to request relief for late S corporation elections."

One other note, too. You must have an eligible entity in place for making the election. For example, you might be able to get the IRS to grant you a late S election that goes back six or twelve months, but the corporation or limited liability company needs to have existed six or twelve months ago. In other words, the thing you want to treat as an S corporation needs to have existed on the effective date of the S election.

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