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I am filing tax returns for an LLC, they are late, and due from 2009. I would like to file 8832 with the return to be treated

New York, NY |

as a corporation for tax purposes. I am told that the IRS may not allow the check the box treatment, since it is a few years late. I am also told that they may allow a late filing. Anyone have knowledge or can help with this? If they dont allow corporate treatment, then would it default to partner status?

Attorney Answers 3


  1. Best answer

    No more than three years and 75 days from the requested effective date of the election cannot pass in order for the IRS to allow the check the box treatment. Thus, if you were to file today, Jan 30, 2013, the effective date of the election would be Nov 16, 2009. Unless the entity is foreign, you are correct that the default status would be a partnership if not elected. If the entity is foreign, you will either be a partnership or a corporation (if all members are limited liability).


  2. You may want to look up the entity classification regulations under Treas. Reg. 301.7701-3. You should also read the instructions to Form 8832. Once you change your tax classification, you cannot do so again for 60 months without IRS approval. Each member of the LLC has to sign the election. As to whether you can go back and get different treatment for back years, 2009, 2010, and 2011, I think it is doubtful. You probably can get the election to be effective for 2012.

    My question would be why Corporate treatment is more beneficial for you than Partnership or Pass-through treatment?

    If the election is disallowed it defaults to partnership treatment if there are more than 2 members or the entity is disregarded if there is only one member.


  3. The IRS will almost certainly not allow your LLC to make such a late election to be treated as a corporation for federal income tax purposes. First, and foremost, the automatic procedures for making a late classification election don't apply because, based on your description, the LLC hasn't filed any returns. In order to file under the automatic procedures the LLC would have to have timely (or no later than 6 months) filed corporate tax returns; since it didn't it doesn't qualify.

    That would leave you with the expensive, time-consuming process of requesting late relief in a private letter ruling from the IRS. The minimum filing fee for a private letter ruling - if you qualified for the reduced fee - would be $675, and that does not include any of the costs you would incur for legal advice, representation, and drafting the private letter request. All told, the process could easily cost several thousand dollars with no guarantee that you would get the relief you were seeking.

    Given that, if you still believe that it's worth the cost, effort, and time to pursue late relief, then it's worth paying the fees of a good tax attorney to handle the ruling request for you. Otherwise, you'd be best off figuring out what the damage, if any, is from not making a timely request to treat the LLC as a corporation, and then how you want to proceed going forward because you could certainly make an election to treat the LLC as a corporation for 2013 and later; however, if you do that you had better make sure you understand what tax consequences, if any, there are from making the conversion. For example, if the LLC has had only one owner since it was formed, then electing to treat it as a corporation for 2013 would be treated by the IRS as if it had been first incorporated in 2013 and the business contributed to it in exchange for the shares of the corporation.

    Good luck.

    www.nytaxcounsel.com

    My answer does not constitute legal advice and may not be relied upon by anyone for any purpose and does not constitute an attorney/client relationship or an offer to form such a relationship. This disclaimer is intended to be fully compliant with the requirements of Treasury Department Circular 230 and the terms thereof are fully incorporated by reference. If you wish to consult with me please contact me at dana@nytaxcounsel or visit my website at www.nytaxcounsel.com

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