How to Revoke an S Corp Election Retroactively

Under federal tax law, the furthest back you can revoke an S corporation election is to the first day of the current tax year, and only if your revocation statement reaches the IRS by the 15th day of the third month of that year. For a calendar-year corporation, that means a revocation filed on or before March 15 can be made effective January 1 of the same year. That is the entire retroactive window. You cannot undo S status for a tax year that has already closed, and if you miss March 15 the earliest full-year revocation shifts to January 1 of the following year.

How Far Back a Revocation Can Reach

Section 1362 sets a single rule for backdating. A revocation made on or before the 15th day of the third month of the tax year takes effect on the first day of that tax year.¹ The Treasury Regulations mirror this, stating that a revocation made before the 16th day of the third month is effective on the first day of the taxable year.² The IRS confirms the same cutoff in its guidance on revoking a subchapter S election.³

So a corporation that wants its 2026 income taxed under C corporation rules from January 1 forward must get the revocation to the IRS by March 15, 2026. There is no mechanism, voluntary or otherwise, for pulling S status off a tax year that has already ended. If you are reading this in April looking to erase last year, the statute does not offer that remedy.

What Happens If March 15 Has Passed

A revocation filed after the 15th day of the third month still works. It just will not reach back to the start of the year. Two outcomes are possible, and the difference depends on what the statement says.

If the late-filed statement does not specify an effective date, the revocation defaults to the first day of the next tax year. A calendar-year corporation that mails its revocation on June 10, 2026, without naming a date will not see it take effect until January 1, 2027.¹

If the statement specifies a date on or after the day it is filed, the revocation takes effect on that specified date.⁴ That same June 10 filing could name June 10, 2026, and the corporation would then have an S termination year split into two short tax years, with income and deductions allocated between an S short year and a C short year.⁵ You cannot, however, backdate the effective date to any day before the filing. Forward-dating or same-day dating is the only choice.

What the Revocation Statement Must Contain

The IRS does not publish a numbered form for revocation. You prepare a written statement and send it to the service center where the corporation files its annual return.³ At minimum, the statement needs to include:

A clear declaration that the corporation is revoking its election under Section 1362(a).
The total number of issued and outstanding shares, counting both voting and non-voting stock, on the date the revocation is made.
The intended effective date. For current-year retroactive treatment, that is January 1 of the tax year.

A principal officer, typically the president or treasurer, must sign. Omitting the share count is a common defect because it prevents the IRS from verifying that the required majority consented.

Shareholder Consent

A revocation is valid only if shareholders holding more than half of the issued and outstanding shares consent, with voting and non-voting shares both counted toward the threshold.¹ Consent must be given on the day the revocation is made. It can appear on the revocation statement itself or on separate attached documents.

Each consenting shareholder provides their name, address, taxpayer identification number, and the number of shares they hold.³ Without consents from holders of more than 50 percent, the revocation fails.

Community Property States

In states like California, Texas, and Arizona, a spouse may hold a community interest in stock even when the certificates list only the other spouse. Treasury Regulations require each person with a community interest in the stock, or in the income from it, to consent.⁶ The regulation was written for S elections, and the IRS applies the same logic to revocations. Missing a spouse’s consent is one of the more common ways a revocation falls apart.

Filing and Proving Timely Receipt

Mail the signed statement, together with all shareholder consents, to the service center where the corporation files its Form 1120-S. There is no electronic submission portal for revocations, so paper is the only route.

Certified mail or a designated private delivery service is not legally required. It is, however, the only practical way to prove you filed on time. The postmark controls the filing date, so a March 14 postmark establishes that you beat the deadline even if the envelope arrives later. Regular first-class mail leaves you with no proof if the IRS claims nothing arrived or that it arrived late.

Keep a complete copy of the statement, every consent, and the mailing receipt. The IRS typically sends an acknowledgment letter confirming termination. If none arrives within 60 days, follow up with the service center. Do not file the next return as a C corporation on Form 1120 until the revocation has been confirmed.

What Happens After the Revocation Takes Effect

Once the revocation is effective, the corporation files Form 1120 and pays corporate income tax at the flat 21 percent federal rate.⁷ Shareholders stop receiving Schedule K-1s and are taxed only on distributions, which the corporation reports on Form 1099-DIV.⁸ Double taxation returns: the corporation pays tax on its income, and shareholders pay again on dividends.

Mid-Year Revocation Allocation

When the effective date falls mid-year, the tax year splits into an S short year ending the day before the revocation date and a C short year beginning on it. The default pro-rata method assigns each item of income and deduction equally to every day of the full year and divides the daily amounts between the two periods.⁵ The corporation may instead elect to use its actual books for each short period, which requires consent from every person who was a shareholder during the S short year and every shareholder on the first day of the C short year.¹ The pro-rata method also drops out automatically if 50 percent or more of the stock changes hands during the termination year.

The Post-Termination Transition Period

After the S election ends, the corporation enters a post-termination transition period (PTTP). It begins the day after the last day of the final S corporation tax year and ends on the later of one year after that day or the extended due date for the final S corporation return.⁹ During the PTTP, cash distributions reduce each shareholder’s stock basis to the extent they do not exceed the corporation’s Accumulated Adjustments Account, which tracks income already taxed to shareholders during the S years. Distributions from the AAA in this window are not taxed again. After the PTTP closes, most corporations lose that special treatment and future distributions follow normal C corporation dividend rules.

Corporations that revoked their S elections after December 21, 2017 may qualify as “eligible terminated S corporations” under a Tax Cuts and Jobs Act provision that allows continued proportional AAA distributions beyond the PTTP. For everyone else, the PTTP is a use-it-or-lose-it window, and planning distributions before it closes matters.

Five-Year Lockout on a New Election

Once revoked, the corporation generally cannot make a new S election for five tax years without IRS consent. The waiting period runs from the first tax year in which the revocation was effective, and the earliest the corporation can re-elect is the fifth tax year after that.¹ A corporation that revoked effective January 1, 2026 could not re-elect S status until the tax year beginning January 1, 2031 at the earliest. The IRS can waive the waiting period, but it does so through a private letter ruling and tends to look more favorably on requests where ownership has substantially changed, the circumstances that led to the revocation no longer exist, and the re-election is not being used to manipulate tax years. The five-year rule makes the decision to revoke a commitment rather than an experiment.

1
Office of the Law Revision Counsel. 26 USC 1362 – Election; Revocation; Termination
2
eCFR. 26 CFR 1.1362-2 – Termination of Election
3
Internal Revenue Service. Revoking a Subchapter S Election
4
Office of the Law Revision Counsel. 26 USC 1362 – Election; Revocation; Termination
5
eCFR. 26 CFR 1.1362-3 – Treatment of S Termination Year
6
eCFR. 26 CFR 1.1362-6 – Elections and Consents
7
Internal Revenue Service. About Form 1120
8
Internal Revenue Service. About Form 1099-DIV, Dividends and Distributions
9
eCFR. 26 CFR 1.1377-2 – Post-Termination Transition Period