Have a client who last year gave me income from a very small online clothing resale store. Everything they indicated was that the LLC was the wife's and did not tell me that they had actually setup an husband/wife MMLLC instead. On their 2020 return we reported as a schedule C under the wife's name. Upon discovering the issue, I called the IRS and they are not looking for a return for 2020.
#1) Is this a case that we can file and 8832 to change it from MMLLC to SMLLC for tax purposes? This is a very small ordeal, less than 10K in annual sales. A 1065 seems overkill here.
#2) If we continue to report it as a schedule C, will the IRS just view this as a LLC that had no activity since no 1065 was filed?