Financial Glossary
Form 2553 Status Check
A Form 2553 status check is the process of confirming with the IRS whether an entity's S corporation election, filed on Form 2553, has been received and accepted. After filing, the IRS issues a determination notice indicating acceptance, and a taxpayer can also verify status by contacting the IRS Business and Specialty line. Confirming acceptance is important because S corporation tax treatment only applies once the election is approved and effective.
Problem & Application
Owner-operators who elect S corporation status to manage self-employment tax need to know the election actually took effect before they begin running payroll and filing as an S corp. Assuming acceptance without confirmation risks filing the wrong return type or misclassifying owner compensation. Because elections can be delayed or rejected over eligibility or timing issues, an explicit status check protects the intended tax treatment for the year.
In Short
Verifying that the IRS accepted your Form 2553 ensures your S corporation tax treatment is in force before you rely on it for payroll and filings.