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I started my own business this last year and wanted it set up as a LLC taxed as an S corp. I filed form 8832 instead of 2553. I haven't paid any taxes and I am a single member LLC. How do I get it changed from a c corp to an s corp now?
ANSWER
Expert Linda Burroughs's Answer:
It is necessary to first file the Form 2553 electing the SUB-S status as soon as possible. Generally, the election will be effective the following year since it is late for last year. However, when you submit the form 2553, you may request consideration for retroactive status.Normally, if a corporation that files Form 2553 after the 15th day of the third month of its tax year but before the 15th day of the third month of the following tax year, then the IRS considers the S-Corporation election to be valid for the following tax year and not valid for the preceding tax year. However, a corporation can file Form 2553 late and still receive IRS approval to make the election retroactive to the beginning of the corporation's tax year. Here's the rules you need to follow. The corporation meets the S-Corporation eligibility criteria: 1) The corporation intended to be classified as an S-Corporation as of the intended effective date of the S-Corporation election, 2)The corporation failed to qualify as an S-Corporation solely because it did not file Form 2553 in a timely manner, 3)Less than 24 months have passed since the original due date of Form 2553, 4)The corporation either has reasonable cause or inadvertently failed to file Form 2553 in a timely manner, 5)The corporation has not yet filed tax returns for the first tax year for which it intended to file as an S-Corporation, or the corporation has filed its first tax return using Form 1120S and the shareholders properly reported their share of income in a manner consistent with the corporation's intention to be an S-Corporation, 6)Shareholders and other taxpayers have not reported their income in a manner inconsistent with the corporation's intention to file as an S-Corporation. If the company meets these requirements, then company should file IRS Form 2553 by writing at the very top of the form the following words: FILED PURSUANT TO REV. PROC. 2003-43 and attach a statement indicating that the corporation either had reasonable cause (and spell out the circumstances) or inadvertently failed to file Form 2553 in a timely manner. Both Form 2553 and the attached statement must be signed by each and every single shareholder. (More information: IRS Revenue Procedure 2003-43.)
