So You Missed the S Corporation Election Deadline? Now What?

If you were looking forward to the tax advantages of electing S Corporation status for your LLC’s or corporation’s 2026 tax year but missed the IRS March 16 deadline, don’t be too hard on yourself. There’s still hope for your business’s bottom line. The IRS may still grant you the S Corporation election for the current tax year if you demonstrate reasonable cause for not meeting the due date.

What Are Valid Reasons for Missing the S Corp Election Deadline?

When filing the S Corporation election form (IRS Form 2553) properly with a reasonable cause explanation, the IRS may allow an entity’s election to be applied retroactively to January 1.

The reasonable cause statement explains why the business owners didn’t file the election on time and confirms the entity’s intent to be treated as an S Corporation for tax purposes as of the beginning of the year. For the IRS to consider late election relief, the missed deadline must be the only issue at play, and the business owners must have taken action to correct it as soon as they identified the problem.

Examples of the reasonable causes the IRS might deem valid for granting late filing relief include:

• The business’s responsible party, accountant, or tax professional failed to submit Form 2553.
• The corporation’s leadership or shareholders weren’t aware they had to submit Form 2553 to the IRS.
• The corporation’s leadership or shareholders weren’t aware of the deadline for submitting Form 2553.

What To Do If You Don’t Submit Your 2553 Form on Time and Don’t Qualify for Relief

Entities that want the election effective at the start of 2027 may file Form 2553 anytime during 2026, so filing now for January 1 of the next tax year will allow you to get a jump on things.

Note that this year’s March 16 deadline applies only to existing businesses that follow the calendar tax year. Existing businesses that follow a fiscal year other than the calendar year have two months and 15 days after the start of their fiscal year to complete their Form 2553, so their due date is different from that of those with a January 1 - December 31 tax year. New LLCs or Corporations have two months and 15 days from their date of formation or incorporation to elect S Corporation tax treatment.

A Quick Refresher on Eligibility Requirements for and Advantages of the S Corporation Election

For an LLC or corporation to qualify for S Corporation status, it must file IRS Form 2553 and meet the following criteria:

• Be a domestic corporation (or other entity eligible to be treated as a Corporation).
• Have only allowable shareholders (individuals, certain trusts, and estates). Partnerships, Corporations, and non-resident alien shareholders are not permitted.
• Have no more than 100 shareholders.
• Have only one class of stock.
• Cannot be an ineligible corporation, such as certain financial institutions, insurance companies, and current or former domestic international sales corporations (DISCs).
• Have a tax year ending on December 31 or meet the qualifications (or obtain approvals) for using a different fiscal year.

Eligible business entities can potentially look forward to the following benefits from the S Corporation election:

• C Corporations avoid having certain profits taxed at both the corporate and individual levels.
• LLC members may lower their self-employment tax burden because only income paid to the business owners through payroll is subject to Social Security and Medicare taxes (a.k.a. FICA). Profit distributions are not subject to FICA; they are only subject to income tax.
• S Corporation status retains personal liability protection for business owners, officers, and directors.
• C Corporations gain the simplicity of passthrough entity tax reporting by electing to be taxed as S Corporations.
• The underlying entity’s state business compliance requirements (other than tax forms) remain essentially unchanged.

Final Thoughts on Missing the S Corp Election Deadline

Business owners who had the best intentions but missed the S Corporation election deadline should not delay filing Form 2553 if they want the best chance of receiving relief. A prompt, correctly completed filing can help ensure a company is approved for S Corporation status and enjoys the tax advantages without delay.