EIN question

[Marie]

Farm LLC was a partnership LLC. I filed a final partnership return.  It is now converted to a single member LLC.  Does the single member LLC need to apply for another EIN, or can it keep the partnership EIN?  Do I need to file Form 8832? 

Another:  Roofing LLC was a partnership.  He changed the name to Flooring LLC with the secretary of state and now it will be filed as a sole proprietorship.  The change was just the name, same operating agreement, but he doesn't have a partner anymore.  Again I filed a final partnership return under Roofing LLC.  Does he keep the same EIN and I file Form 8832?  

Please help me with this.

[Lee B]

Does or will either SMLLC have employees?

[jklcpa]

IRS page of common situations of when to get a new EIN. It's generally when ownership or structure changes.

https://www.irs.gov/businesses/small-businesses-self-employed/when-to-get-a-new-ein

[mcb39]

We were just told in class yesterday that the new entity does NOT have to file for a new EIN>

[Lee B]

13 hours ago, mcb39 said:

We were just told in class yesterday that the new entity does NOT have to file for a new EIN>

Frankly, I disagree with that advice. It would be very easy to list a number of examples where that would be a bad idea.

Would you really want to go forward with the old EIN under new ownership with the linked history in the IRS and state Dept of Revenue databases?

[Abby Normal]

SMLLCs are assigned two EINs, one for the owner and one for the entity. But if a single-member LLC is a disregarded entity that does not have employees and does not have an excise tax liability, then it does not need an EIN. It should use the name and TIN of the single member owner for federal tax purposes.

https://www.irs.gov/businesses/small-businesses-self-employed/single-member-limited-liability-companies

[mcb39]

On 11/8/2024 at 9:31 AM, Lee B said:

Frankly, I disagree with that advice. It would be very easy to list a number of examples where that would be a bad idea.

Would you really want to go forward with the old EIN under new ownership with the linked history in the IRS and state Dept of Revenue databases?

As a matter of fact, in the polling question regarding this subject; most of us disagreed with the answer.  Will have to look it up in the home study book.  I, personally, did not think that was the correct answer.

[Marie]

 Still not sure.  What about filing a 8832?

[BulldogTom]

On 11/7/2024 at 8:22 PM, mcb39 said:

We were just told in class yesterday that the new entity does NOT have to file for a new EIN>

Does not have to or should not?   Is it a choice or a prohibition?

Tom
Longview, TX

[jklcpa]

2 hours ago, Marie said:

 Still not sure.  What about filing a 8832?

Yes, I would file form 8832 for each of the LLC situations you described in the original post.

Also, I agree with Abby Normal's post above about when an SMLLC filing as a disregarded entity would need an EIN.  The form 8832 will list the sole owner's SSN, so that should allow the IRS to match the business and its reporting in future should the EIN no longer be required.

[mcb39]

7 hours ago, BulldogTom said:

Does not have to or should not?   Is it a choice or a prohibition?

Tom
Longview, TX

Will let you know when I get home and look it up.

[BrewOne]

As others pointed out, the IRS does not want single member LLC's (taxed as a sole proprietorship) to be paid under an EIN.  That doesn't mean an LLC shouldn't have an EIN, only that if you are to receive a 1099-NEC, it should be under your Social Security #. 

I had to have an EIN to open a business checking account, I wanted an EIN to use on 1099's that I issued.

 

[mcb39]

This is so often the case with single member LLCs.  They want to open a separate bank account for their business and the bank requires an EIN.  I have had clients who purchase merchandise used in their business and the seller requires an EIN.

In reference to the original post, See "Do You Need a New EIN?" at irs.gov/businesses/small businesses-self-employed/do-you-need-a-new-EIN.  This is what I read in the book; however, there are examples of cases when you do NOT need a new EIN.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

[Randall]

I'm a sole practitioner with no employees.  I am not a SMLLC.  I do have an EIN though.  I did not want to use my SSN on the tax returns I prepare.  I also give it out if anyone needing to 1099 me.  I put the EIN on my Sch C.  I don't know why IRS would care one way or the other on 1099s using SSN or EIN.  But I haven't heard anything from them on that.  I have a separate business checking account.  It was opened long ago probably before I got the EIN.  I used my SSN.  I think a bank would take a person's SSN if they were opeating the business as a sole proprietorship.

[Lee B]

Not all banks will accept a SSN to open a business account.

[BrewOne]

I assume the reason the IRS doesn't want someone filing a Schedule C to receive 1099's with an EIN on them is because there will be no tax return filed using that EIN. However, reality is that, like Randall, I don't know of any pushback from the IRS.

I have academic clients who do consulting work, and the folks with the money (usually from a grant) insist they have to pay a company, not an individual. Whether it's true or not, it's easier to create an LLC.

There's a chicken and egg situation in Florida (if memory serves), when you apply for an LLC you have to provide an EIN.  So you have to apply for an EIN from the IRS for an LLC that doesn't exist yet.

[Randall]

19 hours ago, BrewOne said:

I assume the reason the IRS doesn't want someone filing a Schedule C to receive 1099's with an EIN on them is because there will be no tax return filed using that EIN. However, reality is that, like Randall, I don't know of any pushback from the IRS.

I have academic clients who do consulting work, and the folks with the money (usually from a grant) insist they have to pay a company, not an individual. Whether it's true or not, it's easier to create an LLC.

There's a chicken and egg situation in Florida (if memory serves), when you apply for an LLC you have to provide an EIN.  So you have to apply for an EIN from the IRS for an LLC that doesn't exist yet.

Yes, I would expect an LLC to have an EIN.  There is a place on Sch C for the SSN and the EIN.  I doubt everyone includes the EIN if they do have one though.