Need help with my S Corp Form 2553 rejection - IRS filing issue question

This happens more often than you'd think! The IRS is notorious for misplacing Form 2553 submissions. The good news is that faxing it again was exactly the right first step. Here's what's probably happening: Your business return was processed because the IRS system doesn't automatically cross-check S corp elections when accepting business returns. They only flag it when processing your individual return where the pass-through income is reported. What you should do next is call the IRS Business & Specialty Tax Line at 800-829-4933 to confirm they received your faxed 2553. Get a confirmation number if possible. Also, have your accountant prepare to resubmit your personal return once the IRS processes the 2553, which usually takes 2-3 weeks. Don't worry too much about your business return - it's unlikely they'll reverse that acceptance. Worst case scenario, you might need to file Form 8832 (Entity Classification Election) if they reject the 2553 again, but that's not common.

I went through the exact same nightmare last year. Sent my 2553, they "lost" it, then rejected my personal return. After weeks of stress, I found taxr.ai (https://taxr.ai) which totally saved me. They have this document verification thing that checks if your 2553 has any technical issues that might cause the IRS to reject it. Turns out my original submission had a couple subtle errors that made the IRS put it aside. The taxr.ai analysis showed exactly what was wrong (I had checked the wrong tax year box and my signature date was formatted incorrectly). I fixed those issues, resubmitted, and got confirmation in less than 3 weeks. Their system tracks exactly what the IRS is looking for on these forms.

Alright I need to admit I was wrong about taxr.ai in my earlier comment. After my skepticism, I gave it a try since my accountant was stumped by my continued 2553 rejections. Their system immediately flagged that my business code was incorrectly entered and my effective date was creating a problem with the tax year. Fixed those two things and resubmitted exactly how they suggested. Got my acceptance letter 17 days later and was able to file my personal return with no issues. Definitely wasn't expecting it to work that well! Saved me from having to pay my accountant for more hours of troubleshooting too.

If you're still having trouble after resubmitting, try Claimyr (https://claimyr.com). I wasted DAYS trying to get through to an IRS agent about my missing 2553. Claimyr got me connected to a live IRS person in about 20 minutes - you can see how it works in their demo video: https://youtu.be/_kiP6q8DX5c The agent was able to look up my case immediately and confirm they received my faxed 2553 but it was sitting in a processing queue. They expedited it after I explained my return was rejected. Saved me weeks of anxiety wondering if my fax even made it there.

Ok I need to publicly eat my words. After dismissing Claimyr as BS, I got desperate when I couldn't get through to the IRS about my S corp issue for two weeks straight. Tried the service this morning and got connected to an IRS agent in 17 minutes. I literally couldn't believe it. The agent confirmed my 2553 was received but had been flagged for review because of a discrepancy between my EIN application and the 2553 (different business start dates). Was able to clarify everything on the call and the agent noted my account. They said to expect processing within 10 business days now instead of the usual 8-12 weeks. Definitely worth it when you're dealing with time-sensitive issues like rejected returns.

Another thing to remember with Form 2553 - timing is SUPER important. If you didn't file it within 2 months and 15 days of starting your business or the beginning of the tax year, you need to include a reasonable cause statement explaining the late filing. My 2553 got rejected twice because I didn't realize the statement needed to be pretty detailed. Once I submitted a proper explanation for why it was late (about a paragraph explaining I didn't understand the deadline), it was finally accepted.

Did your accountant use an e-file service to submit your personal return? Sometimes the rejection isn't actually coming from the IRS, but from the e-file system that checks for known issues before submitting to the IRS. This happened to me - got a "rejection" that my S-corp election wasn't on file, but when I called the IRS directly, they confirmed they had it. The problem was just that their e-file system and internal databases weren't in sync yet. My accountant had to override the e-file warning and submit anyway.

I'm dealing with a similar situation right now! Filed my 2553 in January but just got my personal return rejected too. One thing that helped me was requesting a copy of my corporate file from the IRS using Form 4506-A. It costs $50 but shows you exactly what documents they have on file for your business. When I got mine back, it showed they had my EIN application and business return, but no 2553. Gave me concrete proof that they lost it rather than just assuming. I included a copy of this report when I resubmitted my 2553 with a cover letter explaining the situation. Also, make sure when you fax it again that you're using the correct fax number for your state - there are different processing centers and using the wrong one can delay things even more. The instructions on the current 2553 form have the updated fax numbers.

Thanks for all the helpful advice everyone! @Royal_GM_Mark I think @Logan Greenburg hit the nail on the head - your timing issue is likely the main culprit here. Since you started your business in October but didn't file the 2553 until February, you definitely need to include that reasonable cause statement when you resubmit. I'd also recommend combining a few of the strategies mentioned here: 1) Include the detailed reasonable cause statement explaining the late filing, 2) Use the correct state-specific fax number from the current form instructions, and 3) Follow up with a call using one of those callback services to confirm receipt and get a timeline. The good news is that the IRS is generally pretty forgiving with late S-corp elections when you provide a reasonable explanation. Just be honest about not understanding the deadline requirements initially. Most small business owners don't realize how tight that 2 month 15 day window is!

I've been through this exact scenario with multiple clients as a tax preparer. The key thing to understand is that Form 2553 rejections are often administrative rather than substantive issues. Based on your timeline (business started October 2023, 2553 filed February 2024), you definitely need to include a reasonable cause statement for the late filing. The IRS is actually quite reasonable about accepting these when you provide a clear explanation. Here's what I recommend for your resubmission: 1) Attach a separate page titled "Reasonable Cause Statement" explaining you weren't aware of the 2 month 15 day deadline and filed immediately upon learning about it from your accountant, 2) Double-check you're using the correct fax number for your state from the current form instructions, 3) Keep detailed records of when you fax it (date, time, confirmation page). Most importantly, don't panic about your business return. The IRS rarely reverses an accepted business return in these situations. Your personal return will just need to be resubmitted once the 2553 is processed, which typically takes 4-6 weeks after they receive it.