Understanding Your CP261 Notice
CP261 is the approval notice for Form 2553, Election by a Small Business Corporation.
What you need to do
- Keep this S corporation approval letter (CP261 Notice), in your permanent records.
- Timely file Form 1120S reporting income/loss for the S corporation including Schedules K-1 for all shareholders.
- Timely file all employment tax returns.
You may want to
- If your address changes, submit Form 8822-B, Change of Address – Business, to ensure our records remain correct.
Answers to Common Questions
Why is the effective date of the election different from what I submitted on Form 2553?
You didn't timely file Form 2553 for the effective date requested.
Can I have the effective date changed?
Relief may be available through the following Revenue Procedure:
How do I request a Private Letter Ruling (PLR)?
The instructions for requesting a PLR are in the first Internal Revenue Bulletin of each calendar year. See IRB 2014-1
Links that you may find useful
- S Corporations
- Form 1120S, U.S. Income Tax Return for an S Corporation
- S Corporation Compensation and Medical Insurance Issues
- S Corporation Employees, Shareholders and Corporate Officers
- S Corporation Stock and Debt Basis
- Special Rules for Health Insurance Costs of 2-Percent Shareholder-Employees (IRB 2008-2 Notice 2008-1)
- Publication 542 (03/2012), Corporations
For more information on S corporations formed as a Limited Liability Company (LLC):
Understanding your notice
Your notice may look different from the sample because the information contained in your notice is tailored to your situation.
Notice CP261, Page 1
Notice CP261, Page 2
Notice CP261, Page 3