Change in Business Activity Code for 1120

[kpangelinan]

If a corporation was established as a certain industry and the 1120's have always been filed this way with a certain business activity code and it was completely wrong, how does one go about changing that? Do we just change the code on the next filing? Does the state need to be contacted since the corporation was started as being in that industry and the IRS since EIN which was established also has on file the incorrect business code?

Or do we have to close the C-corp and establish a new one?

By the way, the correct code wasn't even close to the one that was used to establish the corporation. It was started as an administrative business, possibly to save on workman's comp insurance on the employees, when in fact the employees are in a much more dangerous job that required very high premiums for workman's comp.

Thanks for any help on this.

[JohnH]

I'd just change the code on the 1120 and move on. Probably nothing will come of it either way.

As for the corporate charter, it depends upon how the original charter was drawn up. Most of the time, the charter just contains a general statement of purpose which covers anything the corporation wants to do as long as it's legal. But if the charter is very specific, the clients may want to consult an attorney regarding amending the original charter. Either way, I doubt there would be any tax-related reason to start from scratch unless any of the prior acts were intended to defraud insurance companies or regulatory authorities in some manner. Again, that's for the attorney to decide.