u/theflow165

Picked up a new client. She formed an LLC in 2024 with intent to be taxed as an S Corp. Client has respected the S election and has run payroll, etc. Prior accountant supposedly handled the formation and election and filing (she has a completed copy of the return).

Client is on extension for 2025 across the board. When I pulled her 2024 transcripts to review, only the personal 1040 showed up — no entity return filed. She also couldn't link her EIN in the IRS Business Portal.

Called the IRS. Agent told me:

• EIN is on file as a C Corp for 2024 and 2025, therefore no valid return on file for 2024 given the prior accountant filed an 1120-S
• Form 2553 (S election) was accepted on May 7, 2026, effective for the 2026 tax year.
• IRS sent multiple requests for additional information over the past year. Client never received them and never signed anything for the prior accountant.

A few questions:

• Has anyone seen the IRS kick an S election forward to the next eligible year like this? My read is the prior preparer submitted an incomplete 2553 (likely unsigned), IRS requested the signed form, no response, and the election ultimately got accepted with a 2026 effective date rather than retroactively denied but with no action by the client?
• If the entity is a C Corp for 2024 and 2025 per the IRS, can I file an 1120-S with Late Election Relief request, or are they stuck having to file as C Corp for 24 & 25?
• Has anyone had success filing 1120-S with Late Election Relief via Intuit ProConnect or is the wiser move to paper file these returns with Late Election Relief on the cover?

Are you filing protective claims for clients who their 2020-2022 impacted returns are mailed but have not yet been processed therefore no penalties and interest assessed yet? By estimating said penalties and interest?