How to Request an S-Corporation Acceptance Letter (CP261) From the IRS

 

It’s important to keep a copy of your S-Corporation acceptance letter in your business records.

If you need to know how to request a copy of your S-corporation acceptance letter, I’ve got the lowdown for you in today’s post.

How can I make my business an S-Corporation?

Once you’ve weighed the advantages and disadvantages of becoming an S-Corporation and have decided you want to file for an S-Corp election, there are several things you’ll need to do before filing.

First, make sure to complete all of the items below:

  1. Choose and reserve a legal name. In most states, you can do this with the Secretary of State’s office.
  2. Draft and file an Articles of Incorporation.
  3. Speak to a small business attorney to see if they recommend you create corporate bylaws in writing.
  4. Issue stock certificates to shareholders.
  5. Apply for an Employer Identification Number (EIN) through the IRS.
  6. Apply for any state or local permits you may need to operate your business.

Next, within 75 days of forming your S-Corporation, you’ll file Form 2553, Election by a Small Business Corporation, with the IRS. This is the form that tells the IRS you want your business to be taxed as an S-Corp. Make sure you keep a copy of this form because you’ll need to reference the information in it when filing your taxes.

If you need help with any of these steps or with completing Form 2553, contact a CPA who works with small businesses so they can help you through the process.

How do I request an S-Corporation acceptance letter?

When the IRS has approved your S-Corp election that you submitted using Form 2553, they will send you a CP261 Notice, which is your S-Corporation Approval Letter. You should receive this notice in the mail within 60 days of filing your S-Corp election form. It’s important that you keep this notice with your permanent files because the IRS will not be able to provide you with a copy of it.

If the IRS denies your S-Corp election, they will send you a CP264 Notice to let you know why it was denied and to tell you when you can reapply.

How do I request an S-Corporation acceptance letter if I lost mine?

If you’ve lost your S-Corporation Approval Letter, known as the CP261 Notice, you cannot request another copy of it. However, you can request an S-Corp Verification Letter, or 385C, by calling the IRS at 1-800-829-4933. When you call, make sure you have your Employer Identification Number (EIN) available. You should receive your 385C in the mail within 14 days of your request. If you’d like a copy of your Form 2553, Election by a Small Business Corporation, you can request a copy of it in the same way.

If you’re having a hard time reaching someone at that IRS phone number, try these instructions for reaching a real person at the IRS.

What happens if my business address changes and doesn’t match my S-Corporation acceptance letter?

No worries. Just submit Form 89822-B to change your address with the IRS. As long as they have the correct address on file, everything is fine.

What if the effective date on my S-Corporation acceptance letter is different from the date I entered on my Form 2553?

If the date that comes back on your CP261 Notice doesn’t match what you entered as your effective date on your S-Corp election form, that’s because the IRS didn’t receive your request on time for that effective date. You may be able to request a date change by requesting a late S-Corp election.

What if I forgot to file my S-Corporation election?

This happens more often than you’d think. In most cases, you can actually file a late S-Corp election up to 3 years and 75 days after you intended to file.

However or whenever you receive your S-Corporation acceptance letter, just make sure you’re keeping that notice in a safe place with all of your important business documents. And if you need help figuring out which forms to file and which forms to keep, make sure you consult an accountant to help you through the process of keeping your small business on track.

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Amy Northard, CPA

The Accountant for Creatives®
+ taxes + bookkeeping + consulting
+ Hang out with me over on Instagram!

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