Partnership LLC becomes single member LLC, can you keep the same EIN.

[codeblue123]

A partner leaves a Partnership LLC, so it becomes a single member LLC.  Can the single member LLC use the same EIN used for the partnership LLC.  The EIN has been used the entire year for payroll, while it was a single member LLC.

[TaxGuyBill · Accepted solution]

Yes, you can keep the same EIN:

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/individual/help/help-toc.jsp

[codeblue123]

Would marking the partnership as final cause any problems with continuing the LLC as a single member on their sch C?

[sjrcpa]

Shouldn't. I usually attach statement to the 1065 explaining why it's final. Don't know if that helps or not.

[codeblue123]

Would we even need to mark the partnership LLC as final, if the LLC will continue as a single member on Sch C?

[sjrcpa]

I'm never sure about that, but I do.

[mcooper17]

When the business goes from being a Partnership to a single member LLC and the single member wants to change the business from LLC to S-Corp do they only need to file Form 2553?

[AvidReader]

I would definitely check final return.  Otherwise the partnership will be assessed with failure to file Form 1065 on time.  That's a steep monthly penalty assessed to all partners.

[sjrcpa]

But there'd be a good reason for not filing - it isn't a partnership anymore.

[AvidReader]

But I believe there's a reason form 1065 includes check boxes for initial and final returns.  When the initial return box is checked, the computer system expects another partnership return for each subsequent tax year and K-1 issued for each partner until the final return box is check.  This allows for the EIN to be used as either a partnership or a disregarded entity.  The computer will automatically assess penalties which will have to be manually abated, if the agency feels so gracious that your explanation is satisfactory.  

You can be assigned an MBR EIN and use it on a Schedule C.  It will be treated as a disregarded entity so long as it was never included on a partnership return, or released from partnership status by checking the final return box.