CP261: your S corporation election is approved, from a later date

What a CP261 means

A CP261 is an approval. The IRS accepted the S corporation election you made on Form 2553, and the notice is your approval letter. [1]source 1

The catch is the date. The IRS says the effective date on the notice differs from the one you requested because Form 2553 wasn't filed in time for that date. [1]source 1

That matters more than it looks. Until the effective date, the business is taxed the way it was before, so the year can split into two kinds of return. We'd sort that out before anyone files anything.

Why people get one

• Form 2553 was filed after the deadline for the effective date you asked for. [1]source 1
• The election was otherwise valid, so the IRS approved it from the next date it could.

First steps

1. Compare the effective date on the notice with the date you asked for on Form 2553.
2. Keep the CP261 in your permanent records. [1]source 1
3. If the earlier date matters, look at late election relief; the IRS page points to Rev. Proc. 2013-30. [1]source 1
4. Plan to file Form 1120-S on time, with the shareholder schedules its instructions call for, and file all employment tax returns on time. [1]source 1
5. If the business address or responsible party changes, file Form 8822-B. [1]source 1
6. Confirm the election in your business tax account at irs.gov, typed in yourself, if anyone asks you to pay or verify something about it.

What not to do

• Don't file as an S corporation for the period before the effective date on the notice.
• Don't assume the requested date stands. The notice controls unless relief is granted.
• Don't pay anyone through a link in an unexpected message to fix an S corporation election.

Related notices

• Related CP575 The notice that confirms the business's EIN.

Keep reading

• S corporation
• Basis

Questions