To change an entity's filing status from a C Corporation (filing Form 1120) to an S Corporation (filing Form 1120S), the entity will file Form 2553 - Election by a Small Business Corporation. The form can be either faxed or mailed to the appropriate IRS Service Center.
There are a number of tests to determine if the corporate entity is eligible to make the election. See the instructions for Form 2553 for a list of the eligibility requirements.
To be considered timely filed, Form 2553 must be signed and dated by a corporate officer authorized to sign, such as, for example, the president, vice president, treasurer, assistant treasurer, or chief accounting officer. An unsigned Form 2553 will not be considered timely filed.
Steps in the process:
- Fax or mail Form 2553 to the appropriate IRS Service Center as directed in the Form 2553 instructions.
- If approved, the corporation will receive a CP261 Notice from the IRS. If the notification of approval is not received, the corporation should follow-up with the Service Center where the Form 2553 was filed.
- File the final C Corporation return (Form 1120) by the due date or extended due date.
- File the initial S Corporation return (Form 1120S) by the due date or extended due date. This filing will complete the change of the entity’s filing requirement in the IRS’s records.