New EIN needed

[Strongsilence-CPA]

Previous company: LLC filing 1065

Conversion to new company: Effective 1/1/2022, exchange of shares.

The new company will be a corporation.

The owners wish to be taxed as an S Corporation.

I think a new EIN is required per the instructions.

Any input is appreciated.

Corporations

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

• A corporation receives a new charter from the secretary of state.
• You are a subsidiary of a corporation using the parent's EIN or you become a subsidiary of a corporation.
• You change to a partnership or a sole proprietorship.
• A new corporation is created after a statutory merger

[sjrcpa]

If they did a conversion under state law I don't think so.

That's one of the reasons companies do this - to keep the same EIN for government contracts, Medicaid reimbursement, etc.

[Strongsilence-CPA]

Sjrcpa

Thank you. Not being an attorney I might be out of my element, and perhaps an attorney should make the decision. 

But I see these provisions in the documents.

 - The members of the Company desire to convert the Company [LLC] to a general law corporation

 - The company shall file Form CONV LLC-GS, “Articles of Incorporation with Statement of Conversion” (the “Conversion Certificate”) with the California Secretary of State as required under the Code; executing all documents necessary to dissolve the Company (including all required filings and notices with state and local authorities) and transfer the legal rights of the Company [LLC] to the Converted Entity

And I so I think this language falls under that provision I cited about a new charter.  

I don't want to tell the client that I don't know the answer, but I think that is the best action to take. So the business attorney probably should be consulted.

[sjrcpa · Accepted solution]

Agreed. I'm not an attorney either.

[BobKamman]

Looks like a no-brainer to me, so probably a trick question.  Old LLC, gone.  Corporation, New.  I mean, it's not like a transgender sole proprietor, is it?

[sjrcpa]

My understanding is that with a conversion, legally it is still the same entity

[joshuabarksatlcs]

My suggestion: Call Mr. Trump at  (202) 622-3080 (not a toll-free call).

I don't have a short answer.  I don't do short answers. 

Here's the short  version of my "long answer": See Rev. Rul. 2004-59. 

It would be nice if the Rev. Rul. had a short answer like: Oh, By the way, dudes and dudettes, you do (or do not) need a new FEIN. 

Perhaps you could talk Mr. Trump into updating it.

I believe the LLC (as discussed in this thread) fell under the same rule that's applicable to a partnership (as discussed in the Rev. Rul.)  I also believe that when the partnership (LLC) liquidates, the entities ends, and the partnership hands the stock of the corporation - a new entity - to the partners (LLC members).  I would interpret the Rev. Rul. as saying that a new FEIN is needed.   

But then, I'm not an attorney, would need further research if I were to advise my client, and is typing under the influence (of -what else - bourbon.)      

Rev. Rul. 2004-59

State law conversion from partnership to corporation.

HOLDING

If an unincorporated state law entity that is classified as a partnership for federal tax purposes converts into a state law corporation under a state law formless conversion statute, the following is deemed to occur: the partnership contributes all its assets and liabilities to the corporation in exchange for stock in such corporation, and immediately thereafter, the partnership liquidates distributing the stock of the corporation to its partners.

DRAFTING INFORMATION

The principal author of this revenue ruling is Christopher L. Trump of the Office of Associate Chief Counsel (Passthroughs and Special Industries). For further information regarding this revenue ruling, contact Christopher L. Trump at (202) 622-3080 (not a toll-free call).

[joshuabarksatlcs]

Further, I don't know about government contracts, Medicaid reimbursement, etc., but for payroll taxes (and UI rate), you could keep the same payroll tax account at CA EDD.  You do need to report a change at EDD.

Report a Change in Business Ownership, Entity Type, or Name – Select if the business has changed ownership, entity type, or business name. Provide the reason for change. Enter the former legal entity type on the “From” line, the new entity on the “To” line, the effective date for the change, and the current Employer Account Number at the top of Item A. Complete the rest of the form with the new business information.

[BobKamman]

Christopher Trump is now a Principal at Deloitte Tax LLP. Prior to joining Deloitte, Mr. Trump was the Assistant to the Branch Chief, Branch 4, in the Office of the Associate Chief Counsel. . .

https://authors.bloombergtax.com/christopher-trump-esq-m73014447559/

And he has a great background for tax work -- his B.A. is in Religious Studies.

It might be useful to reflect on (if not pray over) the purpose of that information submitted with an EIN application.  IRS needs to know whom to pursue, for examination and collection.  The "manager" of an LLC is not the same as the officer of a corporation

[joshuabarksatlcs]

@BobKamman I think you caught the joshuabarksatlcsigitis here.  So, is it a yes or no for the EIN?

[BobKamman]

A yes, if I'm a Revenue Officer looking for everyone who can be assessed the TFRP.

[strong silence]

Thanks for your responses.  The client asked his attorney who did not know.  He decided to get a new EIN because getting to keep the old one might "get us in trouble because maybe if someone were to dig deep enough, we would find that it's disallowed." I don't know what he means.

I'm glad I didn't make the decision.