S-Corp Form 2553 Effective Date Error - Did my accountant mess up my incorporation date?

If I file a corrected Form 2553, will the IRS penalize me or charge additional fees? Also, should I fire my accountant for making such a basic mistake?

There are typically no penalties or fees for submitting a corrected Form 2553, especially when you're fixing an honest mistake before the IRS processes or rejects the original form. The IRS understands that errors happen, and they provide the corrected election option specifically for situations like yours. As for your accountant, one mistake doesn't necessarily mean you should fire them, but it's concerning that they made multiple errors including the company name. Consider having a conversation with them about the mistakes and gauge their response. If they're apologetic and willing to help fix the issues at no additional cost, you might give them another chance. However, if they're defensive or try to charge you for fixing their own mistakes, that might indicate it's time to find someone more reliable. This is a crucial time for your new business, and you need accounting support you can trust.

How long did it take to get results back from taxr.ai? I'm in a similar situation but I'm worried about timing since I need to get this fixed ASAP.

Did you have to upload all your personal info to their site? I'm always sketched out about putting my SSN and business details on some random website...

It was surprisingly quick - I got the initial analysis back in just a few hours. They have a priority option if you're really in a time crunch that gets you results faster. Regarding security concerns, I totally get being cautious. They use bank-level encryption and you can actually redact sensitive info like SSNs before uploading if you want. They mostly need the form structure and dates to identify issues. I was hesitant at first too, but their security certifications and the fact that they don't store your docs long-term made me comfortable enough to try it.

How does this actually work? Do they just sit on hold for you or do they have some special connection to the IRS?

Yeah right. No way they can get through to the IRS faster than anyone else. The IRS phone system is completely broken - I don't believe anyone can magically skip the line.

They use an automated system that basically waits on hold for you. It's nothing magical - they're just taking over the frustrating part of sitting on hold. When they finally reach an agent, they connect the call to your phone. It's basically like having someone else wait in a physical line for you. As for skepticism, I get it. I was doubtful too, but after my fifth attempt to reach the IRS on my own (and getting disconnected after 2+ hours of waiting), I was desperate enough to try. It worked exactly as advertised - I got a call back when they had an agent on the line. No special access, just technology handling the wait time so I could keep working instead of listening to hold music for hours.

You have some flexibility with the effective date, but there are rules: 1) For a new corporation: You can choose either the date the corporation began (incorporation date) OR a date up to 2 months and 15 days before you file the Form 2553. 2) For an existing corporation: You can choose the start of the tax year IF you file within the first 2 months and 15 days of that tax year. This is why OP's situation is problematic - their accountant chose an effective date (1/1/24) that was before the corporation existed (6/5/24) AND was likely outside the 2-month-15-day window for filing.

Got it, thanks for explaining! So if I convert my LLC to an S-Corp in August 2024, I could potentially make it effective as of August 2024 (date of conversion) or I could wait until January 2025 to file and make it effective as of January 1, 2025 (start of tax year)? I think I understand the concept better now.

Yes! My accountant made almost the exact same mistake last year. The IRS sent a notice about 6 weeks after filing saying my S-Corp election was rejected because the effective date was before my incorporation date. I had to resubmit the form with the correct date and include a letter explaining the error. The worst part was that it delayed my S-Corp election by several months, which messed up my quarterly estimated tax payments. I ended up having to file as a C-Corp for part of the year which was a huge hassle.

I was in almost exactly your situation a few months ago! I decided to handle the corrected Form 2553 myself rather than go back to my accountant who made the original mistake. It's actually not that complicated - the form itself is straightforward, and you just need to check the box indicating it's a corrected election and include a brief explanation letter. I used taxr.ai first to make sure I understood what needed to be corrected, and that was sufficient for my situation. Their document review caught the issue and provided clear instructions on how to fix it. I didn't need to call the IRS at all - I just followed their guidance, submitted the corrected form with the proper effective date, and received confirmation from the IRS about 3 weeks later that my S-Corp election was accepted. My advice: don't wait for your accountant or the IRS. File the correction yourself as soon as possible. The longer you wait, the more complicated it could become if the IRS processes the incorrect form first. You've got this!

Great question about documentation! When I filed my corrected Form 2553, I included a copy of my Articles of Incorporation to clearly show the actual incorporation date, along with the explanation letter. This helped provide context for why the original effective date was incorrect. The explanation letter doesn't need to be lengthy - just a brief statement explaining that the original form contained an error in the effective date that predated the corporation's existence, and that you're submitting a corrected form with the proper effective date. I also mentioned that the error was due to professional preparation mistakes, which seemed to help establish "reasonable cause" for the correction. One tip: make sure to keep copies of everything you submit, including the corrected form, explanation letter, and any supporting documents. The IRS processing can sometimes take several weeks, and having your own records helps if you need to follow up or reference what you submitted. From what I've seen in this thread, it sounds like most people who were proactive about filing corrections had positive outcomes, so you're definitely on the right track by not waiting!