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Received 2 notices from the IRS contradicting each other

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BlakeIC

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Not sure where to start looking to figure this out.

Around 2 months ago I received a rejection notice from the IRS for my LLC about it being elected S-corp taxation (this was intentional).

The notice said it was rejected and I would remain taxation as a sole proprietor and that I must submit or do XYZ documents to be re-considered (which I never did).

Well, yesterday I received another notice from the IRS saying that my tax classification was ACCEPTED and I will be taxed as an S-corp which is exactly what I don't want.

Now I don't know if my entity is taxed as a sole proprietor or an s-corp because I have one document that says I am and one that says I am not.

Where would you begin looking for answers if you were in my shoes?
 
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Lex DeVille

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Not sure where to start looking to figure this out.

Around 2 months ago I received a rejection notice from the IRS for my LLC about it being elected S-corp taxation (this was intentional).

The notice said it was rejected and I would remain taxation as a sole proprietor and that I must submit or do XYZ documents to be re-considered (which I never did).

Well, yesterday I received another notice from the IRS saying that my tax classification was ACCEPTED and I will be taxed as an S-corp which is exactly what I don't want.

Now I don't know if my entity is taxed as a sole proprietor or an s-corp because I have one document that says I am and one that says I am not.

Where would you begin looking for answers if you were in my shoes?
By calling the IRS. You'll be on the phone a while but it's probably the fastest way to get answers.
 

CareCPA

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BlakeIC

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CareCPA

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Didn't think it was that simple, sheesh. Thank you!

/thread
In theory it's simple. Let us know how long it takes you to get an answer.
 

ZCP

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Have always had great experiences with them on the phone.
Their system / notices / notices cancelling notices / and the 37 times they have changed and changed back our address on file ...... that leaves something to be desired......
 

fhs8

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You're misreading what they've sent you. You've made an LLC where you've filed an S-corp election. However since you own 100% of it you'll be taxed as a sole proprietorship in addition to taxes for a pass-through S-corp.
 
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CareCPA

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You're misreading what they've sent you. You've made an LLC where you've filed an S-corp election. However since you own 100% of it you'll be taxed as a sole proprietorship in addition to taxes for a pass-through S-corp.
That's... Not how it works.
 

458

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Your EIN registration needs to have a tax classification of a C Corp and the entity as registered with the state as an LLC. You can then send in your S election form. A single member LLC is a disregarded entity unless it elects to be taxed as a C Corp and will fall on Schedule C of your 1040.
 

CareCPA

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Your EIN registration needs to have a tax classification of a C Corp and the entity as registered with the state as an LLC. You can then send in your S election form. A single member LLC is a disregarded entity unless it elects to be taxed as a C Corp and will fall on Schedule C of your 1040.
Also not completely accurate. You don't need to be a C Corp at any time for your LLC to be an S Corp. When you register for your EIN, you should select the LLC option to avoid any potential issues, since you are an LLC.

You did used to have to file two different forms to get your LLC to be taxed as an S Corp - first to be taxed as a C (form 8832) and then as an S (form 2553). The IRS simplified (for once!) this filing. Now you can go from a disregarded entity right to an S Corp with the form 2553. This avoids any complications of having been a C Corp, such as undistributed earnings and profit.

You can continue to be a disregarded entity as a single-member LLC for simplicity, until it makes sense to become an S Corp, and skip the C Corp entirely.
 
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