Form 2553
Hello, my husband and I incorporated our business which is an ABA therapy clinic on 9/15/2020 and we want to be an S corp, but we didn't file form 2553 in time. We actually just started hiring people in August( took us a long time to find a building and then we had to do a build out) so we just opened our doors for business at the end of August 2021. I have filled out form 2553, stating that we didn't realize this was something we were supposed to fill out and return and I also gave them the dates that we actually started business. As of now we have clients waiting to get in here but none have actually started yet. My question is do you think this is sufficient for turning in this form late, or is there something else that I need to do? Thank you
Answers:
You’re on the right track, but you need to do a little more. Please be sure to read the instructions for Form 2553.
If you are filing the Form 2553 now (not as an attachment to the Form 1120S), you must write “FILED PURSUANT TO REV. PROC. 2013-30” in the top margin of the first page of Form 2553.
For your explanation, I would not plead ignorance. IRS doesn’t take that well, as they say that everyone should read the law and be aware of the requirements. Instead, it’s better to give them a tangible reason or reasons why you did not timely file. If COVID played a role, explain that. Or, if you or someone in your family had medical issues, death, etc., explain that. I think even the narrative you explain (finding employees, finding a building, build-out, etc.) could be part of an explanation.
Also, you should mail the form certified mail with return receipt requested, to have proof that you mailed the form and that the Internal Revenue Service received it. IRS still has a backlog of several months. Plus, they are losing things. So you need to protect yourself.
Trying to think outside the box, you may ask yourself if filing the S election with an effective date back to 09/15/2020 is the best thing to do. For example, did you timely file an extension back on 03/15/21? Also, the deadline for the 2020 Form 1120S just passed on September 15, 2021. You may wish the effective date to be 01/01/21. Just something to consider – not trying to add to your stress.
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