Lawyer Formed Us as a C-Corp but We Wanted S-Corp: Do We Still File Form 2553?

Someone on Reddit and their spouse believed they had formed an S-Corp but had no IRS acceptance letter. When they called the IRS, they were told they are a C-Corp and should submit Form 2553. Their lawyer had formed a corporation and said he never makes tax elections and that clients should hire an accountant for tax issues. They wanted to know: Do we still have to file Form 2553 for tax purposes, or would we already have an acceptance letter if we had been formed as an S-Corp? Yes. You must submit Form 2553 to be taxed as an S-Corp. You would not already have an acceptance letter from the lawyer "forming" you as an S-Corp, because S-Corp is not something you form at the state level; it is a federal tax election you make by filing Form 2553 with the IRS. The lawyer formed a corporation; for federal tax, a corporation is C-Corp by default until you elect S-Corp with Form 2553 and the IRS accepts it.

Bottom line: Yes. You must submit Form 2553 to be taxed as an S-Corp, even though the lawyer formed you as a corporation. You would not already have an acceptance letter from the lawyer "forming" you as an S-Corp, because S-Corp is not something you form at the state level; it is a federal tax election you make by filing Form 2553 with the IRS. When you form a corporation (e.g., with the state), that entity is a C-Corp for federal tax by default until you elect S-Corp and the IRS accepts it. File Form 2553 as the IRS said; there are deadlines (generally within 2 months and 15 days of the start of the tax year for which the election is to be effective). Confirm S-Corp eligibility (shareholders, one class of stock, etc.). For effective dates, deadlines, and state compliance, consult a tax professional. Margen can help you model S-Corp tax once the election is accepted.

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Question from Reddit

New company C Corp when we thought we were S Corp

Quick question to the professionals

My wife and I started an S Corp ( thought we did ) When we met with the lawyer we told him we would like to form a company as an S Corp

So my accountant guy asked for a copy of the acceptance letter from us and I told him we don't have one

So I called the IRS today to request a copy of it and she informed me that we are a C Corp and we should submit form 2553

So our lawyer just created a c Corp for us when we clearly told him we want S Corp

And I just emailed him and his response is " I have never made a tax election for a clients entity, I always tell clients to hire an accountant for any tax related issues "

Like completely avoided my question if he formed us as a C Corp instead of an S Corp

Anyways

I was told to go ahead and submit 2553 and it takes up to 60 days and I already got an extension for both personal and business taxes until 10/15/2025

My question is even if he did form us as a Corp

Would I still have to do this 2553 form for tax purposes or I would already have that acceptance letter if he formed us as a S Corp

I'm confused

Source: Reddit

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Analysis

The user believed they had formed an S-Corp but has no IRS acceptance letter and was told by the IRS they are a C-Corp and should submit Form 2553. They are asking whether they must file Form 2553 for tax purposes, or whether they would already have an acceptance letter if the lawyer had "formed" them as an S-Corp. The key distinction: S-Corp is a federal tax election, not an entity type you "form" at the state level. Forming a corporation (e.g., with the state) creates an entity that is a C-Corp for federal tax by default until you elect S-Corp status by filing Form 2553 and the IRS accepts it.

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Answer

Yes. You must submit Form 2553 to be taxed as an S-Corp, even though the lawyer formed you as a corporation. You would not already have an acceptance letter from the lawyer "forming" you as an S-Corp, because S-Corp is not something you form at the state level; it is a federal tax election you make by filing Form 2553 with the IRS.

Why this happened

• When you form a corporation (e.g., with the state), that entity is a corporation under state law. For federal tax, a corporation is treated as a C-Corp by default; it pays entity-level tax and can have double taxation.
• S-Corp is a tax classification elected with the IRS by filing Form 2553. There is no separate "S-Corp formation" at the state level; the lawyer formed a corporation. To be taxed as an S-Corp (pass-through, no entity-level tax), you (or your accountant) must file Form 2553 and get the IRS to accept it. Only then do you get an acceptance letter and S-Corp status for federal tax.
• So the lawyer did not "form you as a C-Corp instead of an S-Corp." He formed a corporation. By default, that corporation is a C-Corp for tax until you elect S-Corp with Form 2553. His point, that he doesn't make tax elections and that clients should use an accountant for tax, is consistent with that: formation (corporation vs. LLC, etc.) is legal; S-Corp vs. C-Corp is a tax election (Form 2553), which is the accountant's (or your) job.

What to do

• File Form 2553 as the IRS said. You can specify the effective date of the election (e.g., first day of the tax year you want S-Corp treatment). There are deadlines; generally within 2 months and 15 days of the start of the tax year for which the election is to be effective (or by the same date in the year you form the corp, depending on timing). The IRS can take up to 60 days to process it; your extension to 10/15/2025 gives you time to file the form and then file your returns once the election is accepted (or per your accountant's advice).
• Eligibility: Confirm your corporation meets S-Corp requirements (e.g., limited number of shareholders, one class of stock, eligible shareholders). Your accountant can complete Form 2553, choose the right effective date, and file your 1120-S (and personal returns) once the election is in place.
• Margen can help you model S-Corp income, salary, and distributions so you're ready once the election is accepted.

Related: Single-Member LLC with S-Corp: Corporation or Disregarded Entity for Wisconsin Withholding? · Converting from S-Corp Back to LLC · Entity Classification Election Mistake (LLC vs C-Corp) · Revoke S-Corp Election, LLC 2026 (New Jersey)

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Applicable Sections

Federal / IRS

• Form 2553: Election by a Small Business Corporation (S-Corp); used to elect S-Corp status so the entity is taxed as a pass-through (no entity-level federal income tax). Filing this form is required to be an S-Corp for federal tax; there is no "formation" of an S-Corp at the state level that replaces this. (IRS Form 2553)
• Deadline: Generally must be filed no later than 2 months and 15 days after the beginning of the tax year the election is to take effect (or by the same date in the year the entity is formed, depending on circumstances). See Form 2553 instructions.
• Eligibility: S-Corps have eligibility rules (e.g., number and type of shareholders, one class of stock); see IRC § 1361 and Form 2553 instructions.

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Practical Notes

• Corporation at state level = C-Corp for federal tax by default. S-Corp = tax election via Form 2553; no acceptance letter until the IRS accepts that form.
• File Form 2553 to get S-Corp status; the lawyer cannot "form" an S-Corp for tax; only the IRS election does that.
• Timing: File 2553 by the deadline for the year you want S-Corp treatment (e.g., 2 months and 15 days after the start of the tax year); processing can take up to 60 days. Your extension to 10/15/2025 helps; work with your accountant on effective date and return filing.
• Eligibility: Ensure your corporation qualifies for S-Corp (shareholders, stock, etc.) before filing.
• Margen can help you plan S-Corp salary, distributions, and tax once the election is in place.
• State: Some states follow the federal S-Corp election; others require a separate filing or notification. Your accountant or state revenue department can confirm.

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Limitations

This answer does not cover state S-Corp procedures, late Form 2553 relief, or multi-entity situations. For effective dates, deadlines, and state compliance, consult a tax professional. Margen can help you model your S-Corp tax after the election is accepted.