What if I missed the S election deadline--am I too late?

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 2011 tax year, the business needs to file its election by March 15, 2011. So, that's the rule.

Obviously, 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, not surprisingly, many times businesses find they've missed the S election deadline.

So there's the problem. And 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.

You need to follow the correct, current IRS procedure for making a late election, however. The correct, current procedure is described (as of May 8, 2008) in Revenue Procedure 2007-62, "Simplified method for taxpayers to request relief for late S corporation elections."

One other note, however. 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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