A client of ours has filed Form 2553 three times to elect S-Corporation status. The first time, his attorney sent the form to the IRS. The second time, my client mailed the form (right before the pandemic began). The third time, I faxed the form (now 13 months ago). As of today, the IRS has not processed the request. On Twitter, a fellow tax professional noted it took 22 months for his client’s Form 2553 to be processed.
Yesterday, I called the IRS up to see if the S-Corporation election had been processed (I have a Power of Attorney for the entity). It has not been. The IRS agent told me that the 2020 tax return for the client also had not been processed, and it should be resent along with another copy of the Form 2553.
I checked with my client; he timely mailed the 2020 tax return and has proof of receipt (he sent it certified mail, return receipt requested). We decided not to resend the tax return because it’s currently taking the IRS months to open their mail. The IRS Agent told me, “If it had been sent in September it would show up in our system by now.” Based on the testimony of IRS Taxpayer Advocate Erin Collins, that’s simply not the case. Until the return has been processed, it doesn’t show in the IRS computer system at all. I decided not to argue with the IRS Agent I spoke to, but he might want to read his own website:
The IRS is opening mail within normal timeframes and all paper and electronic individual refund returns received prior to April 2021 have been processed if the return had no errors or did not require further review.
As of May 6, 2022, we had 9.8 million unprocessed individual returns which include returns received before 2022, and new tax year 2021 returns. Of these, 2.6 million returns require error correction or other special handling, and 7.2 million are paper returns waiting to be reviewed and processed. [emphasis added]
This is straight from the IRS’s “Operations Page During Covid-19,” and it was updated on May 17, 2022. It is extremely likely (if not certain) that my client’s 2020 S-Corporation return is simply sitting in a bin in Ogden, Utah waiting for its turn in the queue. Sending a second return would only cause other problems. Given current IRS processing times for paper returns–about one year–if the return hasn’t been processed by late October we’ll check with the IRS and perhaps then send another copy of the return.
In any case, my client will be heading to the Post Office this morning to mail Form 2553 to the IRS. I’m not holding my breath on it being processed quickly, but miracles do occur.