When you’re launching a small business, you certainly have a lot of documents to keep track of. Sometimes these forms get lost. If you happen to register your company as an S corp with the IRS and you’ve lost your S corp acceptance letter, you can’t request a new one. Thankfully, you can get a form that serves the same purpose.
TL;DR (Too Long; Didn't Read)
Call the IRS' Business & Specialty Tax Line at 1-800-829-4933 to request an S-Corp Verification Letter.
What Is an S Corp?
All businesses need to become legal entities by registering with the IRS, and most small business owners choose between sole proprietorships, partnerships, LLCs and S Corps. This basically tells the IRS how you’re going to pay your taxes and who’s responsible for what. Unlike a typical corporation, an S corp (or small business corporation) does not have a corporate tax structure. It’s taxed similarly to partnerships and sole proprietorships.
The Benefits of an S Corp
Most small business owners opt to form an S corp because of its attractive tax advantages. Like an LLC, the profits and losses are passed through the owner’s personal income tax. This means you aren’t taxed twice (once at the corporate level, then once again at the personal level when the corporation pays you a salary). This also means that you can write off start-up losses and pay less personal income taxes in general.
Let’s be honest: most businesses lose money in their early years. With a regular corporation, losses are not passed through to your own, personal income. This means your business could technically be thousands of dollars in the hole, but you’ll still have to pay taxes on whatever you personally took home. That’s not the case with an S corp.
S Corps Offer Liability Protection
Starting a business is risky, but an S corp makes it a little less so. Unlike a sole proprietorship where your personal and business income are essentially one, your personal assets are protected in an S corp. This means a bankruptcy won’t personally bankrupt you. You aren’t personally held liable for your company’s debts and creditors can’t come in and take personal assets like your house, bank account or car.
Obtaining an S Corp Acceptance Letter
In order to legally run as an S corp, you have to apply and be approved by the IRS. To apply, just fill out IRS Form 2553, and they’ll send you a ruling letter within 60 days that states whether or not your business has been approved to become an S corp. This is known as a CP261 Notice, and you’ll have to keep it in your permanent records along with a copy of your Form 2553 (you’ll need the latter to file taxes).
What If I Lose My S Corp Acceptance Letter?
Accidents happen, but unfortunately, you can’t obtain a copy of your CP261 Notice if you’ve lost the original. This form is auto-generated internally and can only be created once; however, you can get an S corp verification letter (or 385C) which serves the same purpose. To request an S corp verification letter, contact the IRS’ Business & Specialty Tax Line at 1-800-829-4933. It’s open from Monday through Friday from 7:00 a.m. to 7:00 p.m. taxpayer local time.
When you’re on the phone, make sure to have your EIN (employer identification number) handy and some other information about your business like your corporation's address and your name and role in the business. You’ll have to be someone authorized to make business transactions on behalf of the S corp or the IRS will not send you the form. You should receive the 385C about a week or two after your call.
- The IRS sometimes questions whether you filed Form 2553. Without Form 2553, you cannot get an acceptance letter. If the IRS tells you it isn't sure whether you filed, send the IRS evidence of filing. The IRS accepts a copy of your certified mail receipt, Form 2553 with an accepted stamp and Form 2553 with a stamped IRS received date. It also takes the original IRS acceptance letter as proof of filing, but if your purpose is to get a copy of this letter because you never got it or lost it, you'll need to use one of the other evidences in your request and mail them to the IRS.
- Acceptance letters generally reach S-corporations within 60 days of filing. If you checked Box Q1 on Form 2553, however, it can take up to five months. Wait for this time frame to pass before you call the IRS.
Mariel Loveland is a small business owner, content strategist and writer from New Jersey. Throughout her career, she's worked with numerous startups creating content to help small business owners bridge the gap between technology and sales. Her work has been featured in publications like Business Insider and Vice.