CP261 received (2553 denied) — if we refile 2553 w/ late election relief + 1120s, can election apply to 2025?

[Liseuses]

Hi everyone — I’m trying to confirm the correct way to fix an S-Corp election timing issue.

• We filed Form 2553 requesting S-Corp effective for tax year 2025 (intended effective date: 01/01/2025).

• The 2553 did not include late election relief (Rev. Proc. 2013-30 / reasonable cause statement), and the IRS responded with CP261 indicating the 2025 election was not accepted and that the S-Corp election is effective 01/01/2026 instead.

• We want the entity to be treated as an S-Corp for 2025, and file a 2025 Form 1120-S.

Now if we now submit a corrected Form 2553 including late election relief (reasonable cause statement under Rev. Proc. 2013-30) — and send it along with the 2025 1120-S consistent with S-Corp treatment — can the IRS make the S-Corp election retroactive to 2025, even though CP261 currently shows an effective date of 2026?

Or are we locked into 2026 because of the CP261's effective date?

And is the 2553 w/ late election relief + 1120s the right way to do it?

Thanks!

[MaxA1]

It's worth a shot.  Make sure to file your late s-election request correctly and with the proper verbiage to avoid another rejection.  You can file Form 2553 with a late election, with or without the 2025 1120S return.  I would recommend that you file it with your 2025 1120S return so that the IRS can go ahead and process it right then and there.  It is also recommended that you efile the 1120S w/ Form 2553 attached for faster processing.  I would hold off on filing your 2025 personal return until you get confirmation from the IRS.  Here's a link that gives more information on how to make a proper Late S-election request; Relief for Late Elections.