Form 8832 Instructions: The Entity Classification Election

Do you actually need Form 8832?

Most LLC owners who search for this form do not. The IRS assigns every LLC a default classification the day it is formed, and the default is right for the majority:

• One owner: disregarded entity. The LLC’s income goes on the owner’s Schedule C or E. No election needed.
• Two or more owners: partnership. The LLC files Form 1065. No election needed.
• You want S corporation taxation: file Form 2553 only. A timely S election by an eligible LLC is treated as an election to be classified as a corporation as well, so Form 8832 is redundant.
• You want C corporation taxation: this is what Form 8832 is for. It is chosen by LLCs that plan to raise venture capital, retain earnings at the corporate rate, or issue equity to owners who could not hold S corporation shares.
• You elected corporate status earlier and want out: Form 8832 again, subject to the 60 month rule below.
• A foreign entity that needs a US classification: Form 8832, with the foreign country on line 7.

When the election can take effect

The date on line 8 can be no more than 75 days before the date the form is filed and no more than 12 months after it. A date earlier than 75 days back is moved forward to 75 days before filing; a date later than 12 months ahead is moved back to 12 months after. A new LLC that wants corporate taxation from day one therefore has 75 days from formation to get the form in the mail.

The 60 month rule

An LLC that changes its classification by election cannot change it again for 60 months from the effective date. There is one exception: an initial classification election by a newly formed entity, effective on the formation date, does not start the clock, so a new LLC that elects corporation status at formation can still change its mind later. Lines 2a and 2b of the form ask exactly this. An LLC that has been converting back and forth to chase a tax result will be refused.

Form 8832, line by line

• Name, EIN, address. The exact legal name on the state filing and the EIN issued to the LLC. Check the address change box if the address differs from the IRS record. The EIN is required; there is no “applied for” option.
• Relief boxes. Check the Rev. Proc. 2009-41 box only for a late election (see below); the Rev. Proc. 2010-32 box is for certain foreign entities.
• Line 1, type of election. 1a for a newly formed entity making its first choice; 1b for a change to an existing classification.
• Lines 2a and 2b. Whether the entity made another election effective in the last 60 months, and if so whether it was an initial election by a new entity.
• Line 3. Whether the entity has more than one owner. This decides which classifications on line 6 are available.
• Line 4. For a single-owner entity, the owner’s name and identifying number.
• Line 5. If the entity is owned by a parent corporation filing a consolidated return, the parent’s name and EIN.
• Line 6, the classification. A domestic entity with more than one owner picks a for corporation or b for partnership; a single-owner domestic entity picks a for corporation or c for disregarded entity. Lines d, e and f are the foreign equivalents.
• Line 7. The country of organization, foreign entities only.
• Line 8, effective date. Within the 75 day and 12 month window.
• Lines 9 and 10. A contact name and phone number.
• Consent statement and signatures. Every owner signs, or an officer, manager or member authorised to make the election signs on the entity’s behalf. An election changing classification with an effective date in the past also needs the signature of anyone who was an owner between that date and the filing date.

Where to file Form 8832

By mail only. The instructions list no fax number for Form 8832, which is one more reason the S corporation route through Form 2553 is easier for most LLCs. Use certified mail and keep the receipt; the postmark is the filing date for the 75 day window.

Note that Tennessee goes to Ogden for Form 8832 but to Kansas City for Form 2553. The two forms’ state lists are not identical.

Filing late: Rev. Proc. 2009-41

An entity that missed the 75 day window can still get the effective date it wanted if it files within 3 years and 75 days of that date, has reasonable cause for the delay, and has filed all its returns, or had none due, consistently with the classification it is asking for. Check the Rev. Proc. 2009-41 box at the top of the form, attach a statement explaining the reasonable cause, and have all the required parties sign. Outside that window the only route is a private letter ruling.

After you file

• The IRS mails an acceptance letter, notice CP277, or a rejection, notice CP278, generally within 60 days. Keep the acceptance with the CP 575.
• If nothing arrives, call the Business and Specialty Tax Line at 800-829-4933 with the certified mail receipt.
• An LLC now taxed as a corporation files Form 1120 and, if it has working owners, runs payroll for them.

Quick answers

Does an LLC need a new EIN after filing Form 8832?

No. The IRS lists an LLC that already has an EIN choosing to be taxed as a corporation among the changes that do not require a new number. The EIN stays; only the returns change. The new EIN scenario table covers the cases that do.

Do I file Form 8832 before Form 2553?

Not for S corporation status. Form 2553, filed on time by an eligible LLC, counts as both elections. Filing both creates two elections the IRS has to reconcile and can delay the S acceptance.

Can a single-member LLC file Form 8832?

Yes, to be taxed as a corporation (line 6a), or to return to disregarded status (line 6c) after a previous election, subject to the 60 month rule.

Can I fax Form 8832?

The instructions give mailing addresses only. Mail it certified to the center for your state.

Does Form 8832 change the LLC at the state level?

No. The LLC stays an LLC under state law. The election only changes which federal tax return it files and how its owners are taxed. States that follow federal classification will treat it the same way; a few have their own election.