Need new EFIN?

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#1
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I will be transitioning from a sole proprietor to a SMLLC taxed as a disregarded entity effective Jan 01, 2021.

Am I required to submit a new EFIN application and obtain a new EFIN? Based on what I'm reading in IRS Pub 3112, I believe the answer is "yes" as my business structure is changing, however, I thought I'd poll the audience in case you don't have enough on your plate in the run up to 10/15.
 

#2
Joan TB  
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I have had a couple of clients do this in 2020.

Since you are a CPA, do you need to register and obtain a license for the new firm? (I don't know Georgia.)

Other issues that can be impacted are new account for SUTA, new account for Sales Tax, new account for Worker's Comp and possibly other insurance policies, including your E&O carrier. Discuss impact with your bank if there are outstanding loans, new accounts with bank (checking), file new d/b/a with your local county, simultaneously relinquishing prior d/b/a. Make note of new state filings (in Texas, LLC is subject to franchise tax reporting, while sole proprietor is not).

Making it effective at the start of the year really helps to smooth out the transition.
 

#3
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My gut feeling is yes, a new entity would require a new EFIN.
You should make sure your software is transferrable as you likely already renewed.
Given the current state of IRS delays, you should probably apply asap to ensure you receive the EFIN by next filing season.
 

#4
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Thanks Joan. Good point about the E&O. I'll reach out to them to determine what needs to be done. Everything else you mentioned I've already considered and nailed down an answer.

ReckedCPAEA wrote:Given the current state of IRS delays, you should probably apply asap to ensure you receive the EFIN by next filing season.


My thoughts exactly...
 

#5
cp_acwt  
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If looks to me like you don't need a new TIN (EIN) https://sa.www4.irs.gov/modiein/individ ... lp-toc.jsp
follow the page down to the LLC section. So , if that is true then I don't think you need a new EFIN.
 

#6
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The exact wording is:

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.

FWIW, the LLC was formed back in March, and an EIN obtained at that time for banking purposes. Business checking was opened last month, and the SMLLC will co-exist alongside the sole prop (although dormant) until early 2021, at which point the sole prop's accounts will be shut down after everything is transferred over.

No 8832 nor 2553 was filed, as the default federal income tax status of the SMLLC is disregarded entity, and that's what I want to keep it as for the time being.

Like it or not, the SMLLC EIN is not the same as the sole prop EIN in this fact pattern, even if it could/should have been.
 

#7
Joan TB  
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A) You will be required to obtain a new EIN if any of the following statements are true.

A new LLC with one owner (Single Member LLC) is formed under state law, and has an excise tax filing requirement for tax periods beginning on or after January 1, 2008 or an employment tax filing requirement for wages paid on or after January 1, 2009.


B) You will not be required to obtain a new EIN if any of the following statements are true.

A new LLC with one owner (single member LLC) is formed under state law, does not choose to be taxed as a corporation or S corporation, and has no employees or excise tax liability. NOTE: You may request an EIN for banking or state tax purposes, but an EIN is not required for federal tax purposes.

BECAUSE:
On Aug. 16, 2007, changes to Treasury Regulation Section 301.7701-2 were issued. The new regulations state that the LLC, not its single owner, will be responsible for filing and paying all employment taxes on wages paid on or after January 1, 2009. These regulations also state that for certain excise taxes, the LLC, not its single owner, will be responsible for liabilities imposed and actions first required or permitted in periods beginning on or after January 1, 2008.
 


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