S-Corp Strategy
Missed the Deadline? — Late S-Corp Election Relief
Rev. Proc. 2013-30 lets the IRS accept a late S-Corp election up to three years and 75 days after your intended effective date — if you have reasonable cause and meet a handful of conditions.
What Rev. Proc. 2013-30 covers
Revenue Procedure 2013-30 consolidated the IRS's various late-election relief procedures into one streamlined path. It applies to entities that intended to be taxed as an S-Corporation from a specific date but failed to timely file Form 2553.
Eligibility for late-election relief
- The entity intended to be classified as an S-Corp as of the requested effective date
- The entity failed to qualify solely because Form 2553 was not timely filed
- Less than 3 years and 75 days have passed since the requested effective date
- The entity has reasonable cause for the failure and acted diligently to correct it
- The entity (and all shareholders) reported income consistent with S-Corp treatment for all years since the requested effective date — or hasn't filed yet
What to attach to the late Form 2553
At the top of Form 2553, write "FILED PURSUANT TO REV. PROC. 2013-30". Then attach a statement explaining:
- The reasonable cause for the failure (e.g., reliance on tax preparer, owner unaware of deadline, administrative oversight)
- How the entity discovered the failure
- A statement that the entity and shareholders reported income consistent with S-Corp status (or that no returns have yet been filed)
- Each shareholder's signed statement consenting to the election
The payroll catch-up that comes with backdating
If you backdate the election to a prior year, the IRS expects that you've been paying yourself a reasonable salary for that entire period. You'll typically need to:
- File late Forms 941 (quarterly payroll) for any open quarters
- Issue a corrected or first-time W-2 for the owner-officer
- Pay employer-side FICA (and potentially penalties) on the imputed salary
- Reclassify what you previously took as draws as either salary or distributions on the books
For most owners, the SE tax savings still outweigh the catch-up payroll cost — but get the math run before you backdate. Use our savings calculator to ballpark the trade-off.
When to skip backdating and elect for the current year instead
If the prior-year savings are modest and the back-payroll cleanup is significant, electing for the current tax year is often simpler. Read the standard election walkthrough and pick a January 1 effective date.
How GuidedLedger handles late elections
We draft the Rev. Proc. 2013-30 reasonable-cause statement, file the late 2553, set up payroll on the right backdated effective date, file any catch-up 941s, and clean up the books so distributions and salary reconcile cleanly with your 1120-S.
Frequently Asked Questions
How late is too late?
The hard cutoff is 3 years and 75 days from the requested effective date. Beyond that you'll need a private letter ruling, which costs thousands in IRS user fees.
Will the IRS really accept 'I didn't know'?
Surprisingly, yes — relying on a tax professional or simply not being aware of the deadline are both routinely accepted as reasonable cause under Rev. Proc. 2013-30.
Do I owe back payroll?
Yes. If you backdate the election, you must show that the owner was reasonably compensated for the entire period, which usually means filing late payroll returns and paying any FICA owed.
Keep reading
- How to elect S-Corp status — The full Form 2553 walkthrough.
- Reasonable compensation — Set a defensible salary.
- Savings calculator — What you'll save going forward.