The IRS 8832 form, often referred to as the Entity Classification Election form, is a crucial document for businesses that wish to change how they are classified for federal tax purposes. By completing this form, an entity can decide if it wants to be taxed as a corporation, a partnership, or a disregarded entity, depending on what aligns best with its operational goals and tax strategy. If you're considering altering your business's tax classification, don't hesitate to learn more about the process and fill out the form by clicking the button below.
When it comes to managing the tax obligations of a business, understanding the available options can significantly impact how a company is perceived by the Internal Revenue Service (IRS). One critical document in this process is the IRS 8832 form, which allows entities to choose or change their tax classification. This choice plays a vital role in determining the tax rates, filing requirements, and eligibility for certain tax benefits. The form serves as a tool for entities, primarily LLCs (Limited Liability Companies), to elect to be taxed as a corporation instead of being subjected to the default partnership or disregarded entity status. This election can lead to potential tax savings and strategic financial planning advantages. However, making this election also requires understanding the ramifications and rules that come with a change in tax status. Timelines for filing, specific eligibility criteria, and the details of how to file are central aspects that need careful consideration to ensure compliance and to optimize the entity's tax position.
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the important update information below.
New Mailing Addresses
Addresses for mailing certain forms have changed since the forms were last published. The new mailing addresses are shown below.
Mailing address for Forms 706͈A, 706͈GS(D), 706͈GS(T), 706͈NA, 706͈QDT, 8612, 8725, 8831, 8842, 8892, 8924, 8928:
Department of the Treasury
Internal Revenue Service Center
Kansas City, MO 64999
Mailing address for Forms 2678, 8716, 8822-B, 8832, 8855:
Taxpayers in the States Below
Mail the Form to This Address
Connecticut, Delaware, District of Columbia, Georgia,
Illinois, Indiana,Kentucky, Maine, Maryland,
Massachusetts, Michigan, New Hampshire, New Jersey,
New York, North Carolina, Ohio, Pennsylvania, Rhode
Island, South Carolina, Vermont, Virginia, West Virginia,
Wisconsin
Alabama, Alaska, Arizona, Arkansas, California,
Colorado, Florida, Hawaii, Idaho, Iowa, Kansas,
Louisiana, Minnesota, Mississippi, Missouri, Montana,
Nebraska, Nevada, New Mexico, North Dakota,
Ogden, UT 84201
Oklahoma, Oregon, South Dakota, Tennessee, Texas,
Utah, Washington, Wyoming
This update supplements these forms’ instructions. Filers should rely on this update for the changes described, which will be incorporated into the next revision of the forms’ instructions.
Form 8832
(Rev. December 2013)
Department of the Treasury Internal Revenue Service
Entity Classification Election
Information about Form 8832 and its instructions is at www.irs.gov/form8832.
OMB No. 1545-1516
Type
or
Print
Name of eligible entity making election
Employer identification number
Number, street, and room or suite no. If a P.O. box, see instructions.
City or town, state, and ZIP code. If a foreign address, enter city, province or state, postal code and country. Follow the country’s practice for entering the postal code.
Check if:
Address change
Late classification relief sought under Revenue Procedure 2009-41
Relief for a late change of entity classification election sought under Revenue Procedure 2010-32
Part I Election Information
1Type of election (see instructions):
a Initial classification by a newly-formed entity. Skip lines 2a and 2b and go to line 3.
b Change in current classification. Go to line 2a.
2a Has the eligible entity previously filed an entity election that had an effective date within the last 60 months?
Yes. Go to line 2b.
No. Skip line 2b and go to line 3.
2b
3
Was the eligible entity’s prior election an initial classification election by a newly formed entity that was effective on the date of formation?
Yes. Go to line 3.
No. Stop here. You generally are not currently eligible to make the election (see instructions).
Does the eligible entity have more than one owner?
Yes. You can elect to be classified as a partnership or an association taxable as a corporation. Skip line 4 and go to line 5.
No. You can elect to be classified as an association taxable as a corporation or to be disregarded as a separate entity. Go to line 4.
4If the eligible entity has only one owner, provide the following information:
aName of owner
bIdentifying number of owner
5If the eligible entity is owned by one or more affiliated corporations that file a consolidated return, provide the name and employer identification number of the parent corporation:
aName of parent corporation
bEmployer identification number
For Paperwork Reduction Act Notice, see instructions.
Cat. No. 22598R
Form 8832 (Rev. 12-2013)
Page 2
Part I
Election Information (Continued)
6Type of entity (see instructions):
a A domestic eligible entity electing to be classified as an association taxable as a corporation.
b A domestic eligible entity electing to be classified as a partnership.
c A domestic eligible entity with a single owner electing to be disregarded as a separate entity.
d A foreign eligible entity electing to be classified as an association taxable as a corporation.
e A foreign eligible entity electing to be classified as a partnership.
f A foreign eligible entity with a single owner electing to be disregarded as a separate entity.
7If the eligible entity is created or organized in a foreign jurisdiction, provide the foreign country of organization
8 Election is to be effective beginning (month, day, year) (see instructions) . . . . . . . . . . . .
9Name and title of contact person whom the IRS may call for more information
10Contact person’s telephone number
Consent Statement and Signature(s) (see instructions)
Under penalties of perjury, I (we) declare that I (we) consent to the election of the above-named entity to be classified as indicated above, and that I (we) have examined this election and consent statement, and to the best of my (our) knowledge and belief, this election and consent statement are true, correct, and complete. If I am an officer, manager, or member signing for the entity, I further declare under penalties of perjury that I am authorized to make the election on its behalf.
Signature(s)
Date
Title
Page 3
Part II
Late Election Relief
11Provide the explanation as to why the entity classification election was not filed on time (see instructions).
Under penalties of perjury, I (we) declare that I (we) have examined this election, including accompanying documents, and, to the best of my (our) knowledge and belief, the election contains all the relevant facts relating to the election, and such facts are true, correct, and complete. I (we) further declare that I (we) have personal knowledge of the facts and circumstances related to the election. I (we) further declare that the elements required for relief in Section 4.01 of Revenue Procedure 2009-41 have been satisfied.
Page 4
General Instructions
Section references are to the Internal Revenue Code unless otherwise noted.
Future Developments
For the latest information about developments related to Form 8832 and its instructions, such as legislation enacted after they were published, go to www.irs.gov/form8832.
What's New
For entities formed on or after July 1, 2013, the Croatian Dionicko Drustvo will always be treated as a corporation. See Notice 2013-44, 2013-29, I.R.B. 62 for more information.
Purpose of Form
An eligible entity uses Form 8832 to elect how it will be classified for federal tax purposes, as a corporation, a partnership, or an entity disregarded as separate from its owner. An eligible entity is classified for federal tax purposes under the default rules described below unless it files Form 8832 or Form 2553, Election by a Small Business Corporation. See Who Must File below.
The IRS will use the information entered on this form to establish the entity’s filing and reporting requirements for federal tax purposes.
Note. An entity must file Form 2553 if making an election under section 1362(a) to be an S corporation
A new eligible entity should not file Form 8832 if it will be using its
TIP default classification (see Default Rules below).
Eligible entity. An eligible entity is a business entity that is not included in items 1, or 3 through 9, under the definition of corporation provided under Definitions. Eligible entities include limited liability companies (LLCs) and partnerships.
Generally, corporations are not eligible entities. However, the following types of corporations are treated as eligible entities:
1.An eligible entity that previously elected to be an association taxable as a corporation by filing Form 8832. An entity that elects to be classified as a corporation by filing Form 8832 can make another election to change its classification (see the 60-month limitation rule discussed below in the instructions for lines 2a and 2b).
2.A foreign eligible entity that became an association taxable as a corporation under the foreign default rule described below.
Default Rules
Existing entity default rule. Certain domestic and foreign entities that were in existence before January 1, 1997, and have an established federal tax classification generally do not need to make an election to continue that classification. If an existing entity decides to change its classification, it may do so subject to the 60-month limitation rule. See the instructions for lines 2a and 2b. See Regulations sections 301.7701-3(b)(3) and 301.7701-3(h)(2) for more details.
Domestic default rule. Unless an election is made on Form 8832, a domestic eligible entity is:
1.A partnership if it has two or more members.
2.Disregarded as an entity separate from its owner if it has a single owner.
A change in the number of members of an eligible entity classified as an association (defined below) does not affect the entity’s classification. However, an eligible entity classified as a partnership will become a disregarded entity when the entity’s membership is reduced to one member and a disregarded entity will be classified as a partnership when the entity has more than one member.
Foreign default rule. Unless an election is made on Form 8832, a foreign eligible entity is:
1.A partnership if it has two or more members and at least one member does not have limited liability.
2.An association taxable as a corporation if all members have limited liability.
3.Disregarded as an entity separate from its owner if it has a single owner that does not have limited liability.
However, if a qualified foreign entity (as defined in section 3.02 of Rev. Proc. 2010-32) files a valid election to be classified as a partnership based on the reasonable assumption that it had two or more owners as of the effective date of the election, and the qualified entity is later determined to have a single owner, the IRS will deem the election to be an election to be classified as a disregarded entity provided:
1.The qualified entity's owner and purported owners file amended returns that are consistent with the treatment of the entity as a disregarded entity;
2.The amended returns are filed before the close of the period of limitations on assessments under section 6501(a) for the relevant tax year; and
3.The corrected Form 8832, with the box checked entitled: Relief for a late change of entity classification election sought under Revenue Procedure 2010-32, is filed and attached to the amended tax return.
Also, if the qualified foreign entity (as defined in section 3.02 of Rev. Proc. 2010-32) files a valid election to be classified as a disregarded entity based on the reasonable assumption that it had a single owner as of the effective date of the election, and the qualified entity is later determined to have two or more owners, the IRS will deem the election to be an election to be classified as a partnership provided:
1.The qualified entity files information returns and the actual owners file original or amended returns consistent with the treatment of the entity as a partnership;
3.The corrected Form 8832, with the box checked entitled: Relief for a late change of
entity classification election sought under Revenue Procedure 2010-32, is filed and attached to the amended tax returns. See Rev. Proc. 2010-32, 2010-36 I.R.B. 320 for details.
Definitions
Association. For purposes of this form, an association is an eligible entity taxable as a corporation by election or, for foreign eligible entities, under the default rules (see Regulations section 301.7701-3).
Business entity. A business entity is any entity recognized for federal tax purposes that is not properly classified as a trust under Regulations section 301.7701-4 or otherwise subject to special treatment under the Code regarding the entity’s classification. See Regulations section 301.7701-2(a).
Corporation. For federal tax purposes, a corporation is any of the following:
1.A business entity organized under a federal or state statute, or under a statute of a federally recognized Indian tribe, if the statute describes or refers to the entity as incorporated or as a corporation, body corporate, or body politic.
2.An association (as determined under Regulations section 301.7701-3).
3.A business entity organized under a
state statute, if the statute describes or refers to the entity as a joint-stock company or joint- stock association.
4.An insurance company.
5.A state-chartered business entity conducting banking activities, if any of its deposits are insured under the Federal Deposit Insurance Act, as amended, 12 U.S. C. 1811 et seq., or a similar federal statute.
6.A business entity wholly owned by a state or any political subdivision thereof, or a business entity wholly owned by a foreign government or any other entity described in Regulations section 1.892-2T.
7.A business entity that is taxable as a corporation under a provision of the Code other than section 7701(a)(3).
8.A foreign business entity listed on page 7. See Regulations section 301.7701-2(b)(8) for any exceptions and inclusions to items on this list and for any revisions made to this list since these instructions were printed.
9.An entity created or organized under the laws of more than one jurisdiction (business entities with multiple charters) if the entity is treated as a corporation with respect to any one of the jurisdictions. See Regulations section 301.7701-2(b)(9) for examples.
Disregarded entity. A disregarded entity is an eligible entity that is treated as an entity not separate from its single owner for income tax purposes. A “disregarded entity” is treated as separate from its owner for:
•Employment tax purposes, effective for wages paid on or after January 1, 2009; and
•Excise taxes reported on Forms 720, 730, 2290, 11-C, or 8849, effective for excise taxes reported and paid after December 31, 2007.
Page 5
See the employment tax and excise tax return instructions for more information.
Limited liability. A member of a foreign eligible entity has limited liability if the member has no personal liability for any debts of or claims against the entity by reason of being a member. This determination is based solely on the statute or law under which the entity is organized (and, if relevant, the entity’s organizational documents). A member has personal liability if the creditors of the entity may seek satisfaction of all or any part of the debts or claims against the entity from the member as such. A member has personal liability even if the member makes an agreement under which another person (whether or not a member of the entity) assumes that liability or agrees to indemnify that member for that liability.
Partnership. A partnership is a business entity that has at least two members and is not a corporation as defined above under Corporation.
Who Must File
File this form for an eligible entity that is one of the following:
•A domestic entity electing to be classified as an association taxable as a corporation.
•A domestic entity electing to change its current classification (even if it is currently classified under the default rule).
•A foreign entity that has more than one owner, all owners having limited liability, electing to be classified as a partnership.
•A foreign entity that has at least one owner that does not have limited liability, electing to be classified as an association taxable as a corporation.
•A foreign entity with a single owner having limited liability, electing to be an entity disregarded as an entity separate from its owner.
•A foreign entity electing to change its current classification (even if it is currently classified under the default rule).
Do not file this form for an eligible entity that is:
•Tax-exempt under section 501(a);
•A real estate investment trust (REIT), as defined in section 856; or
•Electing to be classified as an S corporation. An eligible entity that timely files Form 2553 to elect classification as an S corporation and meets all other requirements to qualify as an S corporation is deemed to have made an election under Regulations section
301.7701-3(c)(v) to be classified as an association taxable as a corporation.
All three of these entities are deemed to
have made an election to be classified as an association.
Effect of Election
The federal tax treatment of elective changes in classification as described in Regulations section 301.7701-3(g)(1) is summarized as follows:
•If an eligible entity classified as a partnership elects to be classified as an association, it is deemed that the partnership contributes all of its assets and liabilities to the association in exchange for stock in the association, and immediately thereafter, the partnership liquidates by distributing the stock of the association to its partners.
•If an eligible entity classified as an association elects to be classified as a partnership, it is deemed that the association distributes all of its assets and liabilities to its shareholders in liquidation of the association, and immediately thereafter, the shareholders contribute all of the distributed assets and liabilities to a newly formed partnership.
•If an eligible entity classified as an association elects to be disregarded as an entity separate from its owner, it is deemed that the association distributes all of its assets and liabilities to its single owner in liquidation of the association.
•If an eligible entity that is disregarded as an entity separate from its owner elects to be classified as an association, the owner of the eligible entity is deemed to have contributed all of the assets and liabilities of the entity to the association in exchange for the stock of the association.
Note. For information on the federal tax consequences of elective changes in classification, see Regulations section 301.7701-3(g).
When To File
Generally, an election specifying an eligible entity’s classification cannot take effect more than 75 days prior to the date the election is filed, nor can it take effect later than 12 months after the date the election is filed. An eligible entity may be eligible for late election relief in certain circumstances. For more information, see Late Election Relief, later.
Where To File
File Form 8832 with the Internal Revenue Service Center for your state listed later.
In addition, attach a copy of Form 8832 to the entity’s federal tax or information return for the tax year of the election. If the entity is not required to file a return for that year, a copy of its Form 8832 must be attached to the federal tax returns of all direct or indirect owners of the entity for the tax year of the owner that includes the date on which the election took effect. An indirect owner of the electing entity does not have to attach a copy of the Form 8832 to its tax return if an entity in which it has an interest is already filing a copy of the Form 8832 with its return. Failure to attach a copy of Form 8832 will not invalidate an otherwise valid election, but penalties may be assessed against persons who are required to, but do not, attach Form 8832.
Each member of the entity is required to file the member's return consistent with the entity election. Penalties apply to returns filed inconsistent with the entity’s election.
If the entity’s principal
Use the following
business, office, or
Internal Revenue
agency is located in:
Service Center
address:
Connecticut, Delaware,
District of Columbia,
Florida, Illinois, Indiana,
Kentucky, Maine,
Maryland, Massachusetts,
Michigan, New Hampshire,
Cincinnati, OH 45999
New Jersey, New York,
North Carolina, Ohio,
Pennsylvania, Rhode
Island, South Carolina,
Vermont, Virginia, West
Virginia, Wisconsin
Alabama, Alaska, Arizona,
Arkansas, California,
Colorado, Georgia, Hawaii,
Idaho, Iowa, Kansas,
Louisiana, Minnesota,
Mississippi, Missouri,
Montana, Nebraska,
Nevada, New Mexico,
North Dakota, Oklahoma,
Oregon, South Dakota,
Tennessee, Texas, Utah,
Washington, Wyoming
A foreign country or U.S.
Ogden, UT
possession
84201-0023
Note. Also attach a copy to the entity’s federal income tax return for the tax year of the election.
Acceptance or Nonacceptance of Election
The service center will notify the eligible entity at the address listed on Form 8832 if its election is accepted or not accepted. The entity should generally receive a determination on its election within 60 days after it has filed Form 8832.
Care should be exercised to ensure that the IRS receives the election. If the entity is not notified of acceptance or nonacceptance of its election within 60 days of the date of filing, take follow-up action by calling
1-800-829-0115, or by sending a letter to the service center to inquire about its status. Send any such letter by certified or registered mail via the U.S. Postal Service, or equivalent type of delivery by a designated private delivery service (see Notice 2004-83, 2004-52 I.R.B. 1030 (or its successor)).
If the IRS questions whether Form 8832 was filed, an acceptable proof of filing is:
•A certified or registered mail receipt (timely postmarked) from the U.S. Postal Service, or its equivalent from a designated private delivery service;
•Form 8832 with an accepted stamp;
•Form 8832 with a stamped IRS received date; or
•An IRS letter stating that Form 8832 has been accepted.
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Specific Instructions
Name. Enter the name of the eligible entity electing to be classified.
Employer identification number (EIN). Show the EIN of the eligible entity electing to be classified.
Do not put “Applied For” on F! this line.
CAUTION
Note. Any entity that has an EIN will retain that EIN even if its federal tax classification changes under Regulations section 301.7701-3.
If a disregarded entity’s classification changes so that it becomes recognized as a partnership or association for federal tax purposes, and that entity had an EIN, then the entity must continue to use that EIN. If the entity did not already have its own EIN, then the entity must apply for an EIN and not use the identifying number of the single owner.
A foreign entity that makes an election under Regulations section 301.7701-3(c) and
(d)must also use its own taxpayer identifying number. See sections 6721 through 6724 for penalties that may apply for failure to supply taxpayer identifying numbers.
If the entity electing to be classified using Form 8832 does not have an EIN, it must apply for one on Form SS-4, Application for Employer Identification Number. The entity must have received an EIN by the time Form 8832 is filed in order for the form to be processed. An election will not be accepted if the eligible entity does not provide an EIN.
F
Do not apply for a new EIN for an
existing entity that is changing its
!
classification if the entity already
has an EIN.
Address. Enter the address of the entity electing a classification. All correspondence regarding the acceptance or nonacceptance of the election will be sent to this address. Include the suite, room, or other unit number after the street address. If the Post Office does not deliver mail to the street address and the entity has a P.O. box, show the box number instead of the street address. If the electing entity receives its mail in care of a third party (such as an accountant or an attorney), enter on the street address line “C/O” followed by the third party’s name and street address or P.O. box.
Address change. If the eligible entity has changed its address since filing Form SS-4 or the entity’s most recently-filed return (including a change to an “in care of” address), check the box for an address change.
Late-classification relief sought under Revenue Procedure 2009-41. Check the box if the entity is seeking relief under Rev. Proc. 2009-41, 2009-39 I.R.B. 439, for a late classification election. For more information, see Late Election Relief, later.
Relief for a late change of entity classification election sought under Revenue Procedure 2010-32. Check the box if the entity is seeking relief under Rev. Proc.
2010-32, 2010-36 I.R.B. 320. For more information, see Foreign default rule, earlier.
Part I. Election Information
Complete Part I whether or not the entity is seeking relief under Rev. Proc. 2009-41 or Rev. Proc. 2010-32.
Line 1. Check box 1a if the entity is choosing a classification for the first time (i.e., the entity does not want to be classified under the applicable default classification). Do not file this form if the entity wants to be classified under the default rules.
Check box 1b if the entity is changing its current classification.
Lines 2a and 2b. 60-month limitation rule.
Once an eligible entity makes an election to change its classification, the entity generally cannot change its classification by election again during the 60 months after the effective date of the election. However, the IRS may (by private letter ruling) permit the entity to change its classification by election within the 60-month period if more than 50% of the ownership interests in the entity, as of the effective date of the election, are owned by persons that did not own any interests in the entity on the effective date or the filing date of the entity’s prior election.
Note. The 60-month limitation does not apply if the previous election was made by a newly formed eligible entity and was effective on the date of formation.
Line 4. If an eligible entity has only one owner, provide the name of its owner on line 4a and the owner’s identifying number (social security number, or individual taxpayer identification number, or EIN) on line 4b. If the electing eligible entity is owned by an entity that is a disregarded entity or by an entity that is a member of a series of tiered disregarded entities, identify the first entity (the entity closest to the electing eligible entity) that is not a disregarded entity. For example, if the electing eligible entity is owned by disregarded entity A, which is owned by another disregarded entity B, and disregarded entity B is owned by partnership C, provide the name and EIN of partnership C as the owner of the electing eligible entity. If the owner is a foreign person or entity and does not have a U.S. identifying number, enter “none” on line 4b.
Line 5. If the eligible entity is owned by one or more members of an affiliated group of corporations that file a consolidated return, provide the name and EIN of the parent corporation.
Line 6. Check the appropriate box if you are changing a current classification (no matter how achieved), or are electing out of a default classification. Do not file this form if you fall within a default classification that is the desired classification for the new entity.
Line 7. If the entity making the election is created or organized in a foreign jurisdiction, enter the name of the foreign country in which it is organized. This information must be provided even if the entity is also organized under domestic law.
Line 8. Generally, the election will take effect on the date you enter on line 8 of this form,
or on the date filed if no date is entered on line 8. An election specifying an entity’s classification for federal tax purposes can take effect no more than 75 days prior to the date the election is filed, nor can it take effect later than 12 months after the date on which the election is filed. If line 8 shows a date more than 75 days prior to the date on which the election is filed, the election will default to 75 days before the date it is filed. If line 8 shows an effective date more than 12 months from the filing date, the election will take effect 12 months after the date the election is filed.
Consent statement and signature(s). Form
8832 must be signed by:
1.Each member of the electing entity who is an owner at the time the election is filed; or
2.Any officer, manager, or member of the electing entity who is authorized (under local law or the organizational documents) to make the election. The elector represents to having such authorization under penalties of perjury.
If an election is to be effective for any period prior to the time it is filed, each person who was an owner between the date the election is to be effective and the date the election is filed, and who is not an owner at the time the election is filed, must sign.
If you need a continuation sheet or use a separate consent statement, attach it to Form 8832. The separate consent statement must contain the same information as shown on Form 8832.
Note. Do not sign the copy that is attached to your tax return.
Part II. Late Election Relief
Complete Part II only if the entity is requesting late election relief under Rev. Proc. 2009-41.
An eligible entity may be eligible for late election relief under Rev. Proc. 2009-41,
2009-39 I.R.B. 439, if each of the following requirements is met.
1.The entity failed to obtain its requested classification as of the date of its formation (or upon the entity's classification becoming relevant) or failed to obtain its requested change in classification solely because Form 8832 was not filed timely.
2.Either:
a.The entity has not filed a federal tax or information return for the first year in which the election was intended because the due date has not passed for that year's federal tax or information return; or
b.The entity has timely filed all required federal tax returns and information returns (or if not timely, within 6 months after its due date, excluding extensions) consistent with its requested classification for all of the years the entity intended the requested election to be effective and no inconsistent tax or information returns have been filed by or with respect to the entity during any of the tax years. If the eligible entity is not required to file a federal tax return or information return, each affected person who is required to file a federal tax return or information return must have timely filed all such returns (or if not timely, within 6 months after its due date, excluding extensions) consistent with the
Page 7
entity's requested classification for all of the years the entity intended the requested election to be effective and no inconsistent tax or information returns have been filed during any of the tax years.
3.The entity has reasonable cause for its failure to timely make the entity classification election.
4.Three years and 75 days from the requested effective date of the eligible entity's classification election have not passed.
Affected person. An affected person is either:
•with respect to the effective date of the eligible entity's classification election, a person who would have been required to attach a copy of the Form 8832 for the eligible entity to its federal tax or information return for the tax year of the person which includes that date; or
•with respect to any subsequent date after the entity's requested effective date of the classification election, a person who would have been required to attach a copy of the Form 8832 for the eligible entity to its federal tax or information return for the person's tax year that includes that subsequent date had the election first become effective on that subsequent date.
For details on the requirement to attach a copy of Form 8832, see Rev. Proc. 2009-41 and the instructions under Where To File.
To obtain relief, file Form 8832 with the applicable IRS service center listed in Where To File, earlier, within 3 years and 75 days from the requested effective date of the eligible entity's classification election.
If Rev. Proc. 2009-41 does not apply, an
entity may seek relief for a late entity election by requesting a private letter ruling and paying a user fee in accordance with Rev. Proc. 2013-1, 2013-1 I.R.B. 1 (or its successor).
Line 11. Explain the reason for the failure to file a timely entity classification election.
Signatures. Part II of Form 8832 must be signed by an authorized representative of the eligible entity and each affected person. See Affected Persons, earlier. The individual or individuals who sign the declaration must have personal knowledge of the facts and circumstances related to the election.
Foreign Entities Classified as Corporations for Federal Tax Purposes:
American Samoa—Corporation
Argentina—Sociedad Anonima
Australia—Public Limited Company
Austria—Aktiengesellschaft
Barbados—Limited Company
Belgium—Societe Anonyme
Belize—Public Limited Company
Bolivia—Sociedad Anonima
Brazil—Sociedade Anonima
Bulgaria—Aktsionerno Druzhestvo
Canada—Corporation and Company
Chile—Sociedad Anonima
People’s Republic of China—Gufen
Youxian Gongsi
Republic of China (Taiwan)
—Ku-fen Yu-hsien Kung-szu
Colombia—Sociedad Anonima
Costa Rica—Sociedad Anonima Croatia—Dionicko Drustvo Cyprus—Public Limited Company Czech Republic—Akciova Spolecnost Denmark—Aktieselskab Ecuador—Sociedad Anonima or Compania
Anonima
Egypt—Sharikat Al-Mossahamah
El Salvador—Sociedad Anonima
Estonia—Aktsiaselts
European Economic Area/European Union
—Societas Europaea
Finland—Julkinen Osakeyhtio/Publikt Aktiebolag
France—Societe Anonyme
Germany—Aktiengesellschaft
Greece—Anonymos Etairia
Guam—Corporation
Guatemala—Sociedad Anonima
Guyana—Public Limited Company
Honduras—Sociedad Anonima
Hong Kong—Public Limited Company
Hungary—Reszvenytarsasag
Iceland—Hlutafelag
India—Public Limited Company Indonesia—Perseroan Terbuka Ireland—Public Limited Company Israel—Public Limited Company Italy—Societa per Azioni Jamaica—Public Limited Company Japan—Kabushiki Kaisha Kazakstan—Ashyk Aktsionerlik Kogham Republic of Korea—Chusik Hoesa Latvia—Akciju Sabiedriba Liberia—Corporation Liechtenstein—Aktiengesellschaft Lithuania—Akcine Bendroves Luxembourg—Societe Anonyme Malaysia—Berhad
Malta—Public Limited Company
Mexico—Sociedad Anonima
Morocco—Societe Anonyme
Netherlands—Naamloze Vennootschap
New Zealand—Limited Company
Nicaragua—Compania Anonima
Nigeria—Public Limited Company
Northern Mariana Islands—Corporation
Norway—Allment Aksjeselskap
Pakistan—Public Limited Company
Panama—Sociedad Anonima
Paraguay—Sociedad Anonima
Peru—Sociedad Anonima
Philippines—Stock Corporation
Poland—Spolka Akcyjna
Portugal—Sociedade Anonima
Puerto Rico—Corporation
Romania—Societe pe Actiuni
Russia—Otkrytoye Aktsionernoy
Obshchestvo
Saudi Arabia—Sharikat Al-Mossahamah
Singapore—Public Limited Company
Slovak Republic—Akciova Spolocnost
Slovenia—Delniska Druzba
South Africa—Public Limited Company
Spain—Sociedad Anonima
Surinam—Naamloze Vennootschap
Sweden—Publika Aktiebolag
Switzerland— Aktiengesellschaft
Thailand—Borisat Chamkad (Mahachon)
Trinidad and Tobago—Limited Company
Tunisia—Societe Anonyme
Turkey—Anonim Sirket
Ukraine—Aktsionerne Tovaristvo Vidkritogo Tipu
United Kingdom—Public Limited Company
United States Virgin Islands—Corporation Uruguay—Sociedad Anonima Venezuela—Sociedad Anonima or Compania
See Regulations section F! 301.7701-2(b)(8) for any
exceptions and inclusions to items CAUTION on this list and for any revisions made to this list since these instructions were printed.
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Upon deciding to alter the tax classification of your business, the IRS 8832 form becomes a necessary step. This document allows entities to choose how they are viewed and taxed by the federal government. It's a critical path for certain business entities aiming for a tax status that better suits their financial plans. While this process may seem daunting at first, breaking it down into manageable steps can simplify it. What follows is a guide designed to help you through the completion of the IRS 8832 form, ensuring accuracy and compliance.
Filling out the IRS 8832 Form:
Once the form is filed, the waiting period begins. The IRS will review your submission and, if everything is in order, will process your election. Acknowledgment of the election will be sent to the contact person listed on the form. This confirmation is crucial as it formally indicates your business's new tax classification. Pay attention to any communication from the IRS following your submission, as additional information or clarification may be requested to finalize the process.
What is the IRS 8832 form?
The IRS 8832 form, also known as the "Entity Classification Election" form, allows an eligible entity to choose how it will be classified for federal tax purposes. Entities that can use this form include certain foreign and domestic LLCs, partnerships, and corporations. The classification choices primarily include being taxed as a partnership, corporation, or an entity disregarded as separate from its owner.
Who needs to file IRS Form 8832?
Entities that wish to change their current tax classification and that meet the eligibility requirements set by the IRS need to file Form 8832. This may include a newly formed entity that wants to elect a classification different from its default classification or an existing entity that desires to change its classification.
What happens if I don't file the IRS 8832 form?
If you don't file Form 8832, your entity will be taxed according to the default IRS classification rules. For example, a domestic LLC with one owner is treated as a disregarded entity, and a domestic LLC with more than one owner is treated as a partnership, unless it elects otherwise. Not filing when a change in classification is desired could result in unexpected tax implications and requirements.
Can I change my entity's tax classification more than once using Form 8832?
Yes, an entity can change its tax classification more than once. However, after making an election, the entity generally must wait 60 months before making another election. There are exceptions to this rule, particularly if the election is to change to a disregarded entity, but in most cases, the 60-month rule applies.
Is my election on Form 8832 permanent?
No, the election made on Form 8832 is not permanent. As mentioned, an entity can change its classification again after 60 months, or sooner if an exception applies. This allows entities flexibility in how they are taxed as their business situation changes over time.
How do I file IRS Form 8832?
Form 8832 can be completed and filed by the entity or by an authorized representative. It must include detailed information about the entity making the election, the election being made, and it must be signed under penalties of perjury. The completed Form 8832 is then mailed to the appropriate IRS Service Center, the address of which depends on the entity’s principal business, office, or agency location.
What are the deadlines for filing Form 8832?
For a new entity, Form 8832 should be filed within 75 days of the date the entity wants the election to be effective. Existing entities wishing to change their classification should also adhere to this timeline to ensure the election is effective for the desired tax year. Late elections may be accepted under certain circumstances, but it’s best to file within the prescribed timeframe.
Are there penalties for filing the IRS 8832 form late or incorrectly?
While there isn't a specific penalty for filing Form 8832 late or incorrectly, doing so can lead to unintended tax classifications. This misclassification may result in tax liabilities, penalties, or interest for not filing the correct tax forms based on the entity's effective classification. It is crucial to file correctly and within IRS guidelines to avoid such issues.
Can I revoke an election made on Form 8832?
Yes, an election made on Form 8832 can be revoked, but there are specific requirements for doing so. Generally, a revocation requires filing a new Form 8832 indicating the change. Like the original election, there are timelines and restrictions, including the 60-month waiting period before another change can be made. Careful consideration and planning should go into making any election or revocation.
Filling out the IRS 8832 form, which is central to choosing an entity classification for tax purposes, is a process where accuracy and attention to detail are paramount. One common mistake is neglecting to specify the eligible entity’s type correctly. Entities can be classified in various ways under tax law, and misidentifying your entity type can lead to unexpected tax implications. It's crucial to understand whether your entity should be classified, for example, as a partnership, a corporation, or a disregarded entity, based on the specific characteristics and functions of your business.
Another frequent error is overlooking the need to file within the prescribed time frame. The IRS mandates that Form 8832 must be filed within a specific period relative to the date of the election’s desired effectiveness. Timing your filing incorrectly can result in the election being applied to an unintended tax year, complicating your financials and possibly subjecting your entity to undesirable tax obligations for the period in question.
Forgetting to attach a copy of Form 8832 to the entity’s tax return for the year of election is a slip-up that can lead to processing delays and possible questions from the IRS. This procedural step ensures that the IRS links the entity classification election with the entity’s filed return, maintaining consistency across documents and facilitating a smoother processing experience.
Many also miss out on designating a "tax matters partner" or responsible party. This designation is critical for partnerships or other entities that require a designated individual to communicate with the IRS on matters affecting the entity’s tax obligations. Failure to provide this information can lead to administrative complexities and hinder effective communication between your entity and the tax authorities.
A subtle yet impactful mistake comes from incorrectly filling out the date of the election effectiveness. The IRS provides specific guidelines on how the effective date of the classification change should be determined and reflected on the form. Misinterpreting these guidelines may result in the election being effective in a different period than intended, which could significantly impact your tax planning and liabilities.
Moreover, some entities mistakenly believe they need to file Form 8832 when electing S corporation status. However, this election is made with Form 2553, not Form 8832, leading to unnecessary filings and confusion. Understanding the distinct purposes and uses of these forms is essential in making accurate tax election decisions for your entity.
Failure to sign the form is a basic yet surprisingly common oversight. An unsigned Form 8832 can result in the IRS rejecting the election outright, as signatures are necessary to verify the authenticity and intent of the election. Ensuring that the form is duly signed by the authorized person before submission can prevent this avoidable pitfall.
Lastly, a significant mistake is not checking for state-specific tax implications of the federal classification election. While Form 8832 pertains to federal tax classification, certain states may have their own rules and consequences regarding entity classification for state tax purposes. Entities must conduct due diligence to understand how their federal election impacts their state tax status to avoid unforeseen complications and liabilities.
Filing taxes and managing business entities in the United States often involves a meticulous gathering and submission of various forms, of which the IRS Form 8832 is commonly known among businesses seeking to change their tax classification. This form, while vital, is frequently accompanied by other documents necessary for a comprehensive approach to tax filing and business entity management. Understanding these documents helps ensure compliance with IRS regulations and aids in the efficient management of tax-related matters.
Together, these forms and documents play critical roles in tax filing, business entity management, and compliance with United States tax laws. Proper understanding and utilization of these documents can significantly impact a business's financial health and legal compliance. Therefore, businesses must stay informed and ensure all relevant paperwork is accurately completed and timely submitted.
The IRS 8832 form, known for its role in entity classification, shares similarities with the IRS Form 2553, "Election by a Small Business Corporation." Both forms allow entities to choose their tax treatment. However, while Form 8832 is used by entities that want to change how the IRS classifies them for taxation purposes, Form 2553 is specifically for corporations that wish to be treated as an S corporation, which allows income to be passed through to shareholders to avoid double taxation.
Another document akin to IRS 8832 is IRS Form 1065, "U.S. Return of Partnership Income." Like Form 8832, which entities use to elect their classification, Form 1065 is utilized by partnerships to report their financial information to the IRS. Both forms are crucial for entities to ensure they are taxed correctly according to their chosen or default tax classification. However, Form 1065 specifically focuses on the income, deductions, and gains of partnerships.
IRS Form 1120, "U.S. Corporation Income Tax Return," also shares similarities with IRS 8832. This form is used by corporations to file their income tax returns. Just as Form 8832 allows an entity to elect its classification for tax purposes, Form 1120 serves a corporation’s need to comply with tax reporting requirements under its default or elected classification. Both forms are essential in the landscape of business taxation, but Form 1120 is exclusive to corporations.
The IRS Form SS-4, "Application for Employer Identification Number (EIN)," while not a tax classification form, is related to IRS 8832 in its foundational role for new businesses. Entities use Form SS-4 to apply for an EIN, which is necessary for tax purposes. The connection to Form 8832 comes into play as entities need an EIN to be identified by the IRS before making an entity classification election. This process underscores the interconnectedness of IRS documentation in maintaining orderly tax affairs.
Lastly, IRS Form 5472, "Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business," is somewhat similar to IRS 8832. Form 5472 is used by certain foreign-owned corporations to report transactions with foreign or domestic related parties. This requirement captures the international aspect of taxation, akin to how IRS 8832 addresses classification for entities with variations in ownership and structure. Both forms are pivotal for ensuring compliance with U.S. tax laws, taking into account the complexity of entity structures and their activities.
Filling out the IRS 8832 form, which allows an eligible entity to choose how it is classified for federal tax purposes, is an important process for many businesses. Paying close attention to the instructions and ensuring accurate, complete information can have significant impacts on a business's tax obligations and liabilities. Below, find a comprehensive list of do's and don'ts when completing this form to help guide you through the process effectively.
Do's:
Read the instructions carefully before beginning to fill out the form. Understanding the requirements and definitions provided by the IRS can prevent common mistakes.
Ensure that the entity is eligible to elect a classification other than its default classification. Not all business entities are eligible to change their tax status.
Use the correct legal name and taxpayer identification number (TIN) of the entity. This information must match what the IRS has on file.
Clearly specify the elected classification (e.g., partnership, corporation) the business wishes to adopt. This choice will affect tax obligations and how the business is treated under federal law.
Sign and date the form. An IRS 8832 without a proper signature and date will not be processed.
Keep a copy of the completed form and any correspondence with the IRS for your records. This documentation can be essential for future reference or in case of disputes.
Don'ts:
Don't leave parts of the form blank. Incomplete forms may be rejected or cause delays in processing. If a section does not apply, consider entering "N/A."
Don't use pencil or erasable ink when completing the form. All entries should be made in permanent ink to ensure they are not altered after submission.
Don't forget to check the entity’s type according to state law and ensure it matches with the federal classification being requested. Discrepancies might necessitate further clarification or amendment of state records.
Don't submit the form without reviewing all the information for accuracy and completeness. Errors or omissions can lead to incorrect tax treatment or other complications.
By following these guidelines, you can improve the likelihood of a smooth process in electing your business entity's classification for federal tax purposes. Always consider consulting with a tax professional or legal advisor to ensure that your specific circumstances are appropriately addressed.
When it comes to the IRS Form 8832, there are several misconceptions that can lead to confusion for business owners deciding how their entity is taxed. Understanding these common misunderstandings is key to making informed decisions for your business's tax status.
This is a misconception. In reality, any business entity that wants to change its tax classification can use Form 8832, not just large corporations. This includes small businesses and even single-member LLCs that wish to be taxed differently.
Many believe that the only purpose of Form 8832 is to elect C Corporation status, while it actually allows for several different classification elections. Businesses can elect to be taxed as an S Corporation or a partnership, in addition to a C Corporation, depending on their eligibility and preferences.
This statement is false. Filing Form 8832 is completely optional and is only necessary if a business wishes to change its default tax classification.
Contrary to popular belief, businesses are not stuck with their election forever. While the IRS does impose restrictions on how frequently you can change your classification (generally once every five years), changes are indeed possible with careful timing and planning.
Many believe that once Form 8832 is filed, the new tax status takes effect immediately. However, businesses can specify an effective date for their election, which can be up to 75 days before the filing date or up to 12 months after. The change in classification does not happen instantly upon filing.
While seeking professional advice is often wise, especially for complex situations, many businesses find that completing and filing Form 8832 is straightforward. The IRS provides instructions that, if followed carefully, can guide you through the process without the absolute need for professional help.
Clearing up these misconceptions about Form 8832 can help business owners make more informed decisions about their tax classifications, potentially saving time and money while aligning their tax status with their business goals.
When tackling the process of filling out and using the IRS 8832 form, there are several key takeaways that can help streamline the process and ensure that businesses make informed decisions:
By keeping these key takeaways in mind, entities can navigate the process of completing and submitting the IRS 8832 form more effectively, ensuring that their tax classification aligns with their business goals and compliance requirements.
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