S-Corp Acceptance Letter (CP257A): What It Means
Faxing Form 2553 is only half the battle. The final step of the S-Corp election process is receiving the official CP257A acceptance letter from the IRS. Here is why this single piece of paper is so crucial to your business.
Quick Answer
The CP257A Notice is the official acceptance letter from the IRS confirming your LLC is now taxed as an S-Corporation. You will need a copy of this letter to provide to your payroll software, your bank, and your CPA.
Key Points for 2026
- Arrival Time: It typically arrives 60 days after you fax Form 2553.
- Keep It Forever: This is a permanent corporate document. Scan it immediately.
- Double Check Dates: Make sure the "effective date" listed on the letter matches the date you requested.
- No Online Copy: The IRS does not provide a digital download of this letter.
What the Letter Looks Like
The CP257A is a standard IRS notice. The top right corner will have the notice number (CP257A) and the date. The main body of the letter will state something along the lines of:
"We accepted your S corporation election. We accepted your Form 2553, Election by a Small Business Corporation. Your S corporation election is effective beginning [Date]."
Why You Need This Letter
While you can technically start running your business as an S-Corp while waiting for the letter, the CP257A is your only defense if the IRS ever audits you or claims you filed your taxes incorrectly.
- Payroll Setup: Services like Gusto and Rippling often ask to see the letter to verify your corporate status and ensure they are filing the correct quarterly 941 forms.
- CPA Verification: Before filing your Form 1120-S (S-Corp tax return), your CPA will ask for the CP257A. If they file an 1120-S and you aren't actually an S-Corp, the return will be rejected.
- Lending: If you apply for a business loan or line of credit, the underwriter will ask for proof of your corporate tax status.
The IRS occasionally makes mistakes. If you requested an effective date of January 1, 2026, but the letter says January 1, 2027, the IRS has effectively rejected your current-year election and deferred it to next year. If this happens, you must call the IRS to contest it or file a late relief request.
Example Scenario
The Situation: Sarah faxes her Form 2553 in February. In April, she gets the CP257A letter in the mail, throws it in a drawer, and forgets about it. Two years later, she hires a new accounting firm.
The Problem: The new accounting firm refuses to file her 1120-S until she can prove she is an S-Corp. Sarah searches her drawers but can't find the letter.
The Solution: Sarah has to spend an hour on hold with the IRS Business line to request a replacement copy. If she had scanned the CP257A into her Google Drive the day she received it, she could have emailed it to her accountant instantly.
What to Do Next
- Wait patiently: It takes about 60 days to receive the letter.
- Scan it: The moment it arrives, scan a digital copy to your secure cloud storage.
- Verify the data: Check the spelling of your LLC name, the EIN, and the effective date on the letter to ensure there are no IRS typos.
Lost your approval notice? See how to verify your S corp status with the IRS and state records.