What to do if an LLC's Federal ID obtained as partnership when should be sole propr?

[mikeburg]

I have a client who set up an LLC at the beginning of the year. When she obtained her federal ID, the IRS is showing her to be taxed as a partnership (1120) when she is a sole proprietorship (file as 1040 schedule C).

However, she did not start business until July 1st, 2016.

What do we need to do to get the LLC's federal ID taxable entity to be changed from the partnership (LLC) to a sole proprietor (1040 schedule C)?

Thanks for any & all information. mikeburg

[Burke]

Form 1120 is for corporations. The client either did not check a box, or checked the wrong box as to Type of Entity. I would notify the IRS in writing as to the error. Did she file for operation as an LLC with the state?

[mikeburg]

I is the 1065 Form & yes, we did file with the Secretary of State.

Thank you for pointing out that I mentioned the wrong form number from the IRS letter.

It is form 1065 (not form 1120). Yes we did file with the Texas Secretary of State.

The taxpayer never filed a for 8832, could we make the change with it since she just started her business 7-01-16?

Thanks for your help. mikeburg

[DaveinTexas]

Not legally binding

From the CP575 (EIN letter), "We assigned you a tax classification based on the information obtained from you or your representative. It is not a legal determination of your tax classification, and is not binding on the IRS."

Your client needs to do nothing but merely file a Schedule C and list the EIN on the Schedule C. If you receive a letter from the IRS asking for the 1120 or 1065, then you can write the letter. Just for future reference.

[Gretel]

From the CP575 (EIN letter), "We assigned you a tax classification based on the information obtained from you or your representative. It is not a legal determination of your tax classification, and is not binding on the IRS."

Your client needs to do nothing but merely file a Schedule C and list the EIN on the Schedule C. If you receive a letter from the IRS asking for the 1120 or 1065, then you can write the letter. Just for future reference.

Here is what I did in a similar situation. The second page of the EIN letter includes a form that can be sent back to the IRS with correct information. It should state "Sole Member" or something like that (I am not in my office). Some weeks later I got a letter confirming the change.