1065 To Single Member LLc

[mvp2885]

I have a client who a previous accountant set her up as a partnership. She said she doesn't even have a partnership. The notice from the IRS request that she file a 1065. Should I file a 1065, Put in "Final Return" so the IRS gets notified that she is no longer a partnership? If so, since she is an LLC, will she be reverted back to Single member LLC with same EIN?

Thank you.

[ATSMAN]

I have run into this issue before and most likely the reason a 1065 was filed instead of a Sch C is because the taxpayer may have given incorrect information to the preparer or the preparer misunderstood!

The simplest way to fix this problem so that IRS does not chase them is to file a final 1065 in paper with an explanation that previous 1065 were filed incorrectly. Then you file Sch C with SS# not the EIN # if that was used previously. You may have to amend prior open years.

[mvp2885]

I have a client who a previous accountant set her up as a partnership. She said she doesn't even have a partnership. The notice from the IRS request that she file a 1065. Should I file a 1065, Put in "Final Return" so the IRS gets notified that she is no longer a partnership? If so, since she is an LLC, will she be reverted back to Single member LLC with same EIN?

Thank you.

Thank you for your response. Does their EIN stay the same?

[ATSMAN]

Thank you for your response. Does their EIN stay the same?

I am not 100% sure because in my client's case the EIN # was not used anymore because she did not have any payroll. I believe there is a EIN checking site somewhere to verify active EIN.

[ATSMAN]

I got this from IRS.GOV. See if this answers your question:

Partnerships


You will be required to obtain a new EIN if any of the following statements are true.

• You incorporate.
• Your partnership is taken over by one of the partners and is operated as a sole proprietorship.
• You end an old partnership and begin a new one.

You will not be required to obtain a new EIN if any of the following statements are true.

• The partnership declares bankruptcy.
• The partnership name changes.
• You change the location of the partnership or add other locations.
• A new partnership is formed as a result of the termination of a partnership under IRC section 708(b)(1)(B).
• 50 percent or more of the ownership of the partnership (measured by interests in capital and profits) changes hands within a twelve-month period (terminated partnerships under Reg. 301.6109-1).

Limited Liability Company (LLC)


An LLC is an entity created by state statute. The IRS did not create a new tax classification for the LLC when it was created by the states; instead IRS uses the tax entity classifications it has always had for business taxpayers: corporation, partnership, or disregarded as an entity separate from its owner, referred to as a “disregarded entity.” An LLC is always classified by the IRS as one of these types of taxable entities. If a “disregarded entity” is owned by an individual, it is treated as a sole proprietor. If the “disregarded entity” is owned by any other entity, it is treated as a branch or division of its owner.
Changes affecting Single Member LLCs with Employees


For wages paid on or after January 1, 2009, single member/single owner LLCs that have not elected to be treated as corporations may be required to change the way they report and pay federal employment taxes and wage payments and certain federal excise taxes. On Aug. 16, 2007, changes to Treasury Regulation Section 301.7701-2 were issued. The new regulations state that the LLC, not its single owner, will be responsible for filing and paying all employment taxes on wages paid on or after January 1, 2009. These regulations also state that for certain excise taxes, the LLC, not its single owner, will be responsible for liabilities imposed and actions first required or permitted in periods beginning on or after January 1, 2008.

If a single member LLC has been filing and paying employment taxes under the name and EIN of the owner, and no EIN was previously assigned to the LLC, a new EIN will be required for wages paid on or after January 1, 2009. If a single member LLC has been filing and paying excise taxes under the name and EIN of the owner and no EIN was previously assigned to the LLC, a new EIN will be required for certain excise tax liabilities imposed and actions first required or permitted in periods beginning on or after January 1, 2008. The following examples may assist in determining if a new EIN is required:

• If the primary name on the account is John Doe, a new EIN will be required.
• If the primary name on the account is John Doe and the second name line is Doe Plumbing (which was organized as an LLC under state law), a new EIN is required.
• If the primary name on the account is Doe Plumbing LLC, a new EIN will not be required.

You will be required to obtain a new EIN if any of the following statements are true.

• A new LLC with more than one owner (Multi-member LLC) is formed under state law.
• A new LLC with one owner (Single Member LLC) is formed under state law and chooses to be taxed as a corporation or an S corporation.
• A new LLC with one owner (Single Member LLC) is formed under state law, and has an excise tax filing requirement for tax periods beginning on or after January 1, 2008 or an employment tax filing requirement for wages paid on or after January 1, 2009.

You will not be required to obtain a new EIN if any of the following statements are true.

• You report income tax as a branch or division of a corporation or other entity, and the LLC has no employees or excise tax liability.
• An existing partnership converts to an LLC classified as a partnership.
• The LLC name or location changes.
• An LLC that already has an EIN chooses to be taxed as a corporation or as an S corporation.
• A new LLC with one owner (single member LLC) is formed under state law, does not choose to be taxed as a corporation or S corporation, and has no employees or excise tax liability. NOTE: You may request an EIN for banking or state tax purposes, but an EIN is not required for federal tax purposes.

[TaxGuyBill]

Your best option is to call the EIN office, and tell them the EIN was was mistakenly entered as a Multi-Member LLC (Partnership), but that it has always been a Single Member LLC. They should be able to fix the classification.

If 1065s were filed in previous years, that needs to be fixed.




As a side note, if a Multi-Member LLC changes to a Single-Member LLC, the LLC does NOT need a new EIN.

However, unless there is payroll, excise taxes, or employer retirement plans, the LLC would not need a EIN.

For purposes of filling out a W-2 (for the potential to get a 1099), the Single Member LLC uses the ID number of the INDIVIDUAL, not the EIN of the LLC. So the Individual may want to register for their own EIN in their name.



Limited Liability Companies
You will be required to obtain a new EIN if the following statement is true:

• A corporation files papers with the state to convert to an LLC and will use the default classification of partnership. (The corporation is treated as if it has liquidated in this case.)

You will not be required to obtain a new EIN if the following statements are true:

• A corporation files papers with the state to convert to an LLC and will elect via Form 8832 to be taxed as a corporation.
• The number of members in the LLC changes from more than one member to a single member.
• The number of members in the LLC changes from a single member to more than one member.
• A sole proprietor files papers to become a state recognized entity, organizes as an LLC, and will file Form 8832 or Form 2553 to elect to be treated as a disregarded entity or taxed as a corporation or small business corporation.

https://sa.www4.irs.gov/modiein/indi...elp-toc.jsp#16