We picked up a new client this year who already had their 2019 return done for their business. They weren't happy with their preparer, so they came to us to prepare their personal returns and double-check their business return.
According to their EIN letter from the IRS (dated 2009), the EIN was issued for a single-member LLC.
The business filed Form 1065 as a two-person partnership for 2018 & 2019. (The son joined his father in the business. The father filed Schedule C for 2017 and earlier years.)
The business should have applied for a new EIN when they made the switch from single-member to multi-member LLC. We'll apply for a new EIN for them now.
But should we do with the two Forms 1065 for 2018 & 2019? In those years, the business was actually a partnership between father and son that filed a partnership return, but used a "disregarded" EIN.
Suggestions?
This discussion has been locked. New comments cannot be posted on this discussion anymore. Start a new discussion
Did they Efile it? Im surprised it didn't bounce back for the EIN being the wrong entity type.
They did e-file them.
Maybe they don't need a new EIN at all ...
I'm seeing conflicting information on different parts of IRS.gov ... if anyone has any clarification about whether an LLC needs a new EIN when it moves from one to multiple members (or vice versa), I'd appreciate it. The hold times with the IRS are insane. (Go figure).
===========
There's this from https://sa.www4.irs.gov/modiein/individual/help/help-toc.jsp
Limited Liability Companies
You will be required to obtain a new EIN if the following statement is true:
You will not be required to obtain a new EIN if the following statements are true:
=============
And there's this from https://www.irs.gov/businesses/small-businesses-self-employed/do-you-need-a-new-ein -- which seems to avoid the issue entirely but makes it seem like a new EIN is required when a single-member LLC changes to a multi-member LLC because LLC's aren't a real thing and a new EIN would be required if a sole-proprietorship were to change to a partnership or vice versa.
Limited Liability Company (LLC)
An LLC is an entity created by state statute. The IRS did not create a new tax classification for the LLC when it was created by the states; instead IRS uses the tax entity classifications it has always had for business taxpayers: corporation, partnership, or disregarded as an entity separate from its owner, referred to as a “disregarded entity.” An LLC is always classified by the IRS as one of these types of taxable entities. If a “disregarded entity” is owned by an individual, it is treated as a sole proprietor. If the “disregarded entity” is owned by any other entity, it is treated as a branch or division of its owner.
You will be required to obtain a new EIN if any of the following statements are true.
You will not be required to obtain a new EIN if any of the following statements are true.
“You will not be required to obtain a new EIN if the following statements are true:
...The number of members in the LLC changes from a single member to more than one member.”
And there is nothing in the other instructions you quote that contradicts this.
I would focus on whether the correct return is being filed, not whether some account number is correct. If the old EIN’s shoe fits at IRS, then keep wearing it.
Were any notices ever sent out by the agency because the business filed Form 1065 using an EIN issued for a single member LLC? I've seen a multi-member LLC EIN used on a Schedule C and it never generated any notices. The business owner ran a single member LLC and was treated as a disregarded entity although he applied for the multi-member EIN for a partnership that was never formed.
You have clicked a link to a site outside of the Intuit Accountants Community. By clicking "Continue", you will leave the community and be taken to that site instead.