Client has a partnership with no activity.... wants to keep name and EIN.

[Hamacher]

I have a client that has a partnership with no activity but would like to keep the name and EIN. Is there a way to avoid having to file tax returns or should he keep filing returns with $0?

Thanks in advance for your help!

[Roland Slugg]

Copied from the instructions for F-1065:

Who Must File

Domestic Partnerships

Except as provided below, every domestic partnership must file Form 1065, unless it neither receives income nor incurs any expenditures treated as deductions or
credits for federal income tax purposes.

The name and TIN will persist even if no return is filed for one or more years. The IRS does not reassign inactive TINs. The partnership may, however, receive a letter from the IRS asking about the missing return, but that should be easily dealt with via a brief reply.

[AZ-Tax]

What about 1120s?

Copied from the instructions for F-1065:

The name and TIN will persist even if no return is filed for one or more years. The IRS does not reassign inactive TINs. The partnership may, however, receive a letter from the IRS asking about the missing return, but that should be easily dealt with via a brief reply.

I don't recall reading those same instructions on the 1120s instructions, did I miss something for I will soon be filing an S-Corp final return but the shareholder would have liked to put his S-Corp as inactive but its my understanding the shareholder cannot do that with not filing a 1120s each year when due. Since the name is an LLC, the shareholder should be able to retain the name and am I correct the IRS will not reassign an inactive TIN also for an S-Corp?

[Hamacher]

Final return

Copied from the instructions for F-1065:



The name and TIN will persist even if no return is filed for one or more years. The IRS does not reassign inactive TINs. The partnership may, however, receive a letter from the IRS asking about the missing return, but that should be easily dealt with via a brief reply.

Do you think I should prepare a final return?

[taxxcpa]

There may be a state return and failure to file a zero income return could result in forfeiture of the LLCs state charter.

I have an inactive corporate client for which I file a zero income return with both federal and state. All I have to do is roll it over from the prior year,enter a zero and it's ready. Not more than about five minutes work. I see no incentive to discontinue filing.

[buzzardbreath]

Antithesis

The very fact that your client wants to retain the company and FEIN # is prima facie reasoning that filing should continue. If this is an LLC, he should actually take steps to CLOSE the LLC with the state before stopping the 1065.
If he doesn't do this, typically Sec-of-State annual fees will accumulate, and if he doesn't pay them the state will administratively close the LLC.

From what I've read in the OP, it is the client who is wishing an eternal presence of this partnership, and so long as that is the case, I would file a return. Responsibility for continued existence (and filing) should be borne by the client and not the tax preparer in this situation.

[TXEA]

The return should be filed for any entity until such time as a final return has been filed.

[Hamacher]

Thanks

Thanks all for the input. I will advise him to continue filing returns until he wants to permanently close the company.

[Burke]

I don't recall reading those same instructions on the 1120s instructions, did I miss something for I will soon be filing an S-Corp final return but the shareholder would have liked to put his S-Corp as inactive but its my understanding the shareholder cannot do that with not filing a 1120s each year when due. Since the name is an LLC, the shareholder should be able to retain the name and am I correct the IRS will not reassign an inactive TIN also for an S-Corp?

In Virginia, the SCorp (and/or partnership) remains in effect with the State Corporation Commission (if it was organized in this state), as long as the fees are paid and the annual reports are submitted to the SCC. I imagine that is the process in any other state. The existence of the entity is separate from its filing of tax returns. The tax returns are for the IRS/State tax depts. when there is income and/or deductions to report. If there are none, the filing of such returns appears to be an unnecessary cost. Other states may have different rules, you should check their websites for instructions. This process can be relatively simple if it is a solely-owned corp, or LLC with only one member. When other persons/entities are involved in the ownership, one must be aware of possible complications in the future due to any number of factors, whether those persons are going to continue to be involved, and resulting possible liabilities related to them.