Late file 2553 for SMLLC

There are a lot of posts on this topic, but I'm not finding a direct answer to my situation and want to be sure we do it correctly.

The client is a single member LLC that was incorporated in February 2016. There was no business income for 2016, but if there had been, it would have been included on a Sch. C.

We thought the client had elected S corporation status on time for 2017. When I called the IRS to ascertain this, I learned the 2553 had not been filed.

We extended the 2017 return with a paper-filed extension for an S corp. We haven't been notified that the extension was rejected. The client paid it's owner a salary for 2017 and treated the business as an S corporation. So, it looks and smells like an S corp.

My goal is to late e-file the 2553 with the 2017 1120-S now, according to 2013-30. Questions:

1. The IRS person with whom I spoke on the PPL told me to be sure to check the box for "relief for late election filed by a corporation". In Georgia, LLCs are not considered to be corporations, so I'm not clear about this. Would it instead be "relief for late election filed by an entity eligible to be treated as a corporation". I can't see any significant difference between the two, and I don't see a box to check.

2. It looks like the most important part of the 2553 is writing the explanation for the late filing on the form. Is "confusion between the taxpayer and the accountant" a good enough excuse for reasonable cause?

Thanks for your thoughts on these basic issues.

1. There is no such box. Sec. 4.03(2)(a) of Rev. Proc. 2013-30 says to enter at the top of Form 1120S “INCLUDES LATE ELECTION FILED PURSUANT TO REV. PROC. 2013–30”

2. Sounds good to me.

Thanks for the confirmation, Dave.

One more question - can the late-filed 2553 be e-filed with the return as is (meaning the two signature lines are blank)? Or, does it require the hand written signature of the shareholder on the shareholder's consent form? If it does, we would attach the 2553 with signature as a .PDF attachment to the return. We're not clear.

Can't be efiled because the IRS has no "S-corp bucket" established to receive the return. You'll get an efile error based on type of return with that EIN.

Paper-file only. I'd highly suggest you mail it certified and I hope you mailed the extension certified as well. I've had several of the 2553s accepted when filed late only to have late penalties then levied on the 1120S. There was nowhere for them to record the EXT send in March, which triggers the late filing penalties. It's all resolvable, but you can look better to your client by advising them that this will happen.

Thanks, Captain. So, to be clear, we'll paper file the 1120-S return with the 2553 attached to it. We did paper file the extension via certified mail, so we'll attach that documentation as well. This was a big help.

Can't be efiled because the IRS has no "S-corp bucket" established to receive the return. You'll get an efile error based on type of return with that EIN.

Paper-file only. I'd highly suggest you mail it certified and I hope you mailed the extension certified as well. I've had several of the 2553s accepted when filed late only to have late penalties then levied on the 1120S. There was nowhere for them to record the EXT send in March, which triggers the late filing penalties. It's all resolvable, but you can look better to your client by advising them that this will happen.

I have two SMLLCs which I filed late elections for in 2021 (August and December) effective 1/1/21. Neither have been processed as of today (confirmed by extensions getting rejected). I spoke to someone about a month ago to check the status of the 2553 faxed in August 2021 and he said timing is 7-9 months currently and suggested we paper file 1120-S with 2553 attached and the required rev proc headers because the paper filed extension could get rejected (as you've described).

You think it's better to timely file the 1120S with late S-Election even if already previously submitted? Perhaps include a cover letter indicating it's a second submission of 2553?