File a final tax return and related forms. The type of return to file and related forms depends on the type of business. The various types of business entities and the appropriate tax return are below:

Sole Proprietorship. A sole proprietorship is an individual who is the sole owner of an unincorporated business. Such a business reports its income and expenses on Schedule C (Profit or Loss from a Business) of the owner’s Form 1040 income tax return. In addition to Schedule C, the sole proprietor may need to file a Form 4797 (Sale of Business Property) to report sale or discontinuance of use of Section 179 depreciable property and Form 8545 (Asset Acquisition Statement) to report the sale of the business and its assets.

Partnership.  A partnership is a relationship between two or more partners to conduct a trade or business. Partnerships report their income and expenses on Form 1065 (U.S. Return of Partnership Income). Partnerships must report the business’s closure by filing a final Form 1065. On the final return, partnerships should: (i) report capital gains and losses from the sale Schedule D of Form 1065; (ii) check the “final return” box (near the top of the front page of the Form 1065 return below the name and address; and (iii) check the “final return” box on Schedule K-1 (Partner’s Share of Income, Deductions, Credits, Etc) of the Form 1065. Partnerships may also need to file Form 4797 and/or Form 8549 with their final return.

Corporations. A corporation, including a corporation that has elected to be treated as an “S” corporation that is closing down, should file Form 966 (Corporate Dissolution or liquidation) after adopting a resolution or plan to dissolve the corporation or liquidate any of its stock.

“C” Corporation. A Corporation that has not elected to be treated as an “S” corporation needs to file a final tax return on Form 1120 (U.S. Corporation Income Tax Return) for the year the business closes. Indicate on Form 1120 that the return is the corporation’s final return by checking the “final return” box, which is near the top of the front page of the return, below the name and address. The corporation should report capital gains and losses from the sale of the business assets on Schedule D to Form 1020. The corporation may also need to file Form 4797 and/or Form 8549 with its final return.

“S” Corporation. A corporation that has elected to be treated as an “S” corporation needs to file a final return on Form 1120-S (U.S. Income Tax Return for an S Corporation) for the year the business closes. Indicate on Form 1120S that the return is the corporation’s final return by checking the “final return” box, which is near the top of the front page of the return, below the name and address. The S corporation should report capital gains and losses from the sale of business assets on Schedule D to the Form 1120-S and needs to remember to check the “final return” box Schedule K-1 (Shareholder’s Share of Income, deductions, Credits, Etc) to Form 1120-S. The S corporation may also need to file Form 4797 and/or Form 8549 with its final return.

IMPORTANT NOTE: A limited liability company (LLC) is a business entity organized under state law that can choose its classification for federal income tax purposes. Depending on the number and identity of the owners, an LLC can elect to be treated as a partnership, a corporation, an “S” corporation, or a disregarded entity.

Report Compensation Payments. A business with one or more employees must pay any final wages or compensation, make final federal tax deposits and report employment taxes. Failure to withhold and deposit employment taxes may result in the IRS assessing responsible parties (owners, officers, managers) a trust fund recovery penalty equal to the unpaid employment taxes. A business should file:

• Form 941 (Employer’s Quarterly Federal Tax Return) or Form 944 (Employer’s Annual Federal Tax Return) for the quarter in which the business made final wage payments and: (i) check the box to tell the IRS the business has closed and enter the date final wages were paid on line 17 of Form 941 or line 14 of Form 944; and (ii) attach a statement to the return showing the name of the person keeping the payroll records and the address where those records will be kept.
• Form 940 (Employer’s Annual Federal Unemployment Tax Return) for the calendar year in which the business paid final wages. Check box “d” in the Type of Return section.
• Form W-2 (Wage and Tax Statement) for the year the employees are paid their final wages. Forms W-2 are due to the employees by the due date of the final Form 941 or Form 944. Final Forms W-2 can be electronically filed with the Social Security Administration.
• Form 8027 (Employer’s Annual Information Return of Tip Income and Allocated Tips) to report tip income and allocated tips.

Terminate Retirement and Health Benefit Plans. A business that provides its employees with a pension or retirement benefit plan should consult the IRS guidance on terminating a retirement plan at https://www.irs.gov/retirement-plans/terminating-a-retirement-plan. Businesses that provide Health Savings Accounts or similar health care programs should review IRS Publication 969 at https://www.irs.gov/forms-pubs/about-publication-969.

Report Contract Worker Payments. Businesses that pay contractors at least $600 a year for services, including parts and materials, must report those payments made to each contractor during the calendar year in which they go out of business. Businesses file Form 1099-NEC (Nonemployee Compensation) to report such contractor payments.

Cancel EIN and Close IRS Business Account.  The Business owners should notify the IRS that the business has stopped doing business so the IRS can close the business’s tax account. To cancel an employer identification number (EIN) and close a business’s tax account, the business needs to send the IRS a letter that includes: (i) the complete legal name of the business, (ii) the business’s EIN, (iii) the business address; and (iv) an explanation of why the business wants to close the account. The business should also enclose a copy of the EIN assignment notice (CP575) it received from the IRS with the cancellation letter. Send both documents to the IRS at the address where the business files its tax returns. Note that the IRS won’t close the business account until all necessary returns have been filed and all taxes owed are paid. So a business that wants to close its tax account most likely needs to pay any taxes before they are technically due.

Keep Business Records.  How long a business needs to keep records depends on what’s recorded in each document. Generally, records relating to property should be retained until the period of limitations expires for the year in which you dispose of the property. The period of limitations for taxes is the period in which the business can amend its tax return to claim a credit or refund, or the IRS can assess additional tax. Generally, we recommend holding tax-related materials at least seven years, and employment-related items should be kept for a minimum of 4 years.

If you want to dissolve your corporation, LLC, or partnership or have questions about closing a business, please get in touch with Jeff Senney at 937-223-1130 or JSenney@PSELaw.com.

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According to Gillibrand, “digital assets, blockchain technology, and cryptocurrencies have experienced tremendous growth in the past few years and offer substantial potential benefits if harnessed correctly.”  Gillibrand believes that “it is critical that the United States act as a leader in developing policy to regulate new financial products, while also encouraging innovation and protecting consumers.”
For the purposes of this bill, a “digital asset” is defined as a natively electronic asset that: (a) confers economic, proprietary, or access rights or powers; and (b) is recorded using cryptographically secured distributed ledger technology, or any similar analog.

This definition includes virtual currency and ancillary assets, payment stablecoins, and other securities and commodities. An “ancillary asset” is referred to in the legislation as an intangible, fungible asset that is offered, sold, or otherwise provided to a person in connection with the purchase and sale of a security through an arrangement or scheme that constitutes an investment contract.
The proposed legislation grants regulatory authority to the Commodity Futures Trading Commission, and not the Securities and Exchange Commission. The legislation also provides a legal distinction between which digital assets are treated as commodities or securities using the Supreme Court’s Howey test for determining whether a transaction qualifies as an investment contract.
The legislation would amend the definition of a digital asset broker set forth in the Infrastructure Investment and Jobs Act (PL 117-58).  The modified definition of a digital asset broker would be “any person who for consideration stands ready in the ordinary course of a trade or business to effect sales of digital assets at the direction of their customers.” Furthermore, the digital asset reporting requirement under PL 117-58 would be delayed until January 1, 2025.

If the proposed legislation becomes law, the IRS would be required, within one year, to adopt guidance on the disposition of so-called forks and airdrops, merchant acceptance of digital assets, mining and staking, and charitable contributions of digital assets, and the legal characterization of payment stablecoins as indebtedness. Important tax provisions include a $200 per transaction de minimis exclusion from gross income when virtual currency is used for payment of goods and services and the extension of safe harbors for securities and commodities trading activity by non-U.S. persons who use a U.S.-based financial institution for digital asset trading purposes.

Under this legislation, the Government Accountability Office would be directed to report to Congress, the Treasury Department, and the Labor Department on the potential opportunities and risks of retirement investing using digital assets.  So far, the federal government has discouraged such investments, but their potential viability has been gaining traction, especially among younger workers.
This legislation has bipartisan support but is likely to face significant changes if it moves forward.  No matter the fate of this particular legislation, the tax treatment of crypto seems to be a priority for lawmakers.  “As this industry continues to grow, it is critical that Congress carefully crafts legislation that promotes innovation while protecting the consumer against bad actors” Senator Lummis has said.

If you have questions on any tax, business, or other legal matter, please contact your tax or business attorney at Jsenney@pselaw.com or 937-223-1130.

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Mike Sandner, Jeff Senney & Adam Beiersdorfer along with our client Joel Bopp enjoyed time with friends and colleagues at the Centerville Golf Outing at Yankee Trace Golf Club.

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This does not mean exempt organizations don’t have to file on time. It just means the IRS won’t be sending out late notices.
Delinquent return notices. Due to the COVID-19 pandemic, the IRS has a backlog of several million returns filed by individuals and entities. Due to the backlog, IRS computers have sent out delinquent return notices to taxpayers who have already filed. The IRS has stopped mailing these delinquent return notices to avoid further confusion for taxpayers who have filed a return that the IRS hasn’t yet processed.

Some taxpayers and tax professionals may still receive delinquent return notices during the next few weeks. Generally, the IRS said there is no need to call or respond to the notice if the return identified in the notice was already filed.

The suspended notices include reminders and first and second delinquency notices regarding Form 5500, Form 5500-EZ, Form 5500-SF, Form 990, Form 990EZ, and Form 990N.
If you have any questions regarding filing tax returns for exempt organizations or reinstating an exempt organization that has lost its 501c3 status or had its charter revoked due to failing to file, please get in touch with one of our business or tax attorneys at 937-223-1130 or Jsenney@pselaw.com

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Taxpayers who do not receive their W-2 or 1099 forms before April may be worried about having to pay a late filing penalty. Filers have several ways to avoid an incomplete or late return:

First, if an expected Form W-2 or 1099 is not delivered by mid-February, taxpayers should immediately contact the person or entity they worked for.

Second, if the employer or other payor doesn’t comply or can’t be reached, taxpayers should call the IRS at 800-829-1040 for assistance. Before calling, the taxpayers should have the following information ready:

• Their name, address, phone number, taxpayer identification number, and dates of employment
• Their employer’s name, address, phone number, and identification number (if known)

Considering the unprecedentedly high volume of calls to understaffed IRS customer support centers, taxpayers should contact the IRS as soon as possible.
The IRS will attempt to reach the employer or payor to request the missing form and will send the taxpayers a Form 4852 “Substitute for Form W-2 “Wage and Tax Statement,” which the taxpayers can attach to their return if the IRS fails to retrieve the missing form from the employer.

If taxpayers don’t receive the missing or corrected form in time to file their income tax return by the April deadline, they may estimate the wages or payments made to them, as well as any taxes withheld, by completing a Form 4852 and attaching it to their return. Form 4852 filers must include information to the best of their knowledge, their employer or payor, the missing Form W-2 or Form 1099 information, how those amounts were determined, and what efforts were made to receive either form. The Form 4852 filing instructions recommend that taxpayers use information from their last pay stub of the year.

If taxpayers receive an original or corrected form W-2 or 1099 after filing their return, they must amend their return by filing a Form 1040-X “Amended U.S. Individual Income Tax Return.”
If taxpayers are seeking to file an amended return for a previous tax year and are missing that past year’s Form W-2 or Form 1099, the IRS’s Get Transcript tool can be used to request wage and income transcripts.
While taxpayers can request transcripts for the most recent full tax year, they may not be available until July, according to the IRS. Requests for extensions to e-file tax returns can be submitted using IRS Free File and must include an estimate of tax liability. Paper applications for extensions can be mailed via Form 4868, “Application for Automatic Extension of Time to File U.S. Individual Income Tax Return.” If approved, the extended filing deadline is October 17, 2022.

Still have questions regarding federal or state income taxes? Don’t hesitate to contact your tax return preparation professional or call jsenney@pselaw.com or 937-223-1130.

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Gig economy earnings are taxable. Generally, income earned from the gig economy is taxable and must be reported to the IRS. The gig economy is an activity where people earn income providing on-demand work, services, or goods – often through a digital platform like an app or website.  The IRS notes that taxpayers must report income earned from the gig economy on a tax return, even if the income is: (a) from part-time, temporary, or side work; (b) not reported on an information return such as a Form W-2 or 1099; or (c) paid in virtual currency or any other manner including cash, property, goods or services. 

Virtual currency reporting and tax requirements. There is a question at the top of Form 1040 asking about virtual currency transactions. All taxpayers filing a Form 1040 must check the box indicating either “yes” or “no.” A transaction involving virtual currency includes, but is not limited to:

• The receipt of virtual currency as payment for goods or services provided;
• The receipt or transfer of virtual currency for free (without providing any consideration) that does not qualify as a bona fide gift;
• The receipt of new virtual currency as a result of mining and staking activities;
• The receipt of virtual currency as a result of a hard fork (change in an existing cryptocurrency);
• Exchange of virtual currency for property, goods or services;
• An exchange/trade of virtual currency for another virtual currency;
• A sale of virtual currency; and
• Any other disposition of financial interest in virtual currency.

If individuals disposed of any virtual currency that was held as a capital asset through a sale, exchange or transfer, they should check “Yes” on the initial question on Form 1040 and use Form 8949 (Sales and other Dispositions of Capital Assets) to figure their capital gain or loss and report it on Schedule D (Form 1040). If they received any virtual currency as compensation for services or disposed of any virtual currency they held for sale to customers in a trade or business, they must report the income as they would report other income of the same type. More information on virtual currency can be found in the instructions for Form 1040 and on the IRS’s Virtual Currency webpage.

A U.S. citizen or resident alien’s worldwide income is generally subject to U.S. income tax, regardless of where they live.
U.S. citizens and resident aliens must report unearned income, such as interest, dividends, and pensions, from sources outside the United States unless exempt by law or a tax treaty. They must also report earned income, such as wages and tips, from sources outside the United States. An income tax filing requirement generally applies even if a taxpayer qualifies for tax benefits, such as the Foreign Earned Income Exclusion or the Foreign tax Credit. These tax benefits are only available if an eligible taxpayer files a U.S. income tax return.
A taxpayer is allowed an automatic 2-month extension to June 15th if both their tax home and abode are outside the United States and Puerto Rico. Even if allowed an extension, a taxpayer will have to pay interest on any tax not paid by the regular due date of April 18, 2022.

Those serving in the military outside the U.S. and Puerto Rico on the regular due date of their tax return also qualify for the extension to June 15th. The IRS recommends attaching a statement to the return if one of these two situations applies.

Reporting required for foreign accounts and assets. Federal law requires U.S. citizens and resident aliens to report their worldwide income, including income from foreign trusts and foreign bank and other financial accounts. In most cases, affected taxpayers need to complete and attach a Schedule B to their tax return. Part III of Schedule B asks about the existence of foreign accounts, such as bank and securities accounts, and usually requires U.S. citizens to report the country in which each account is located.

In addition, certain taxpayers may also have to complete and attach to their return a Form 8938 “Statement of Foreign Financial Assets”.  Generally, U.S. citizens, resident aliens, and certain nonresident aliens must report specified foreign financial assets on this form if the aggregate value of those assets exceeds certain thresholds. The instructions for this form contain more details.
Further, separate from reporting specified foreign financial assets on their tax return, taxpayers with an interest in, signature, or other authority over foreign financial accounts whose aggregate value exceeded $10,000 at any time during 2021, must file electronically with the Treasury Department a Financial Crimes Enforcement Network (FinCEN) a Form 114 “Report of Foreign Bank and Financial Accounts (FBAR).”  The deadline for filing the annual FBAR is the same as that for Form 1040, but FinCEN gives filers who miss the original deadline an automatic extension until October 15, 2022, to file the FBAR.  extension.
If you have questions or need assistance with any federal or state income tax matter, please contact your tax professional or Jeff Senney at 937-223-1130 or Jsenney@pselaw.com.

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Beginning in 2022, P2P platforms will be required to report a user’s business transactions to the IRS if the user receives more than $600 for goods or services in the year. Under prior rules, the P2P platforms were only required to send a user a Form 1099 if their gross income exceeded $20,000, or if the user had 200 separate transactions, within a calendar year. Under the new rules, for those users who exceed the $600 threshold in 2022, the P2P platforms will send out 1099-K tax forms to report income to be included on the user’s 2022 income tax return.

In order to properly accomplish this task, the P2P platforms will likely start asking users to provide additional information including whether the payment was for business or personal purposes, and the user’s employer identification number or social security number.
If a user is running a business and receive some or all of your payments through a P2P platform, the user should set up a separate business account. Otherwise, business and personal items will be commingled, and the P2P platform could be reporting personal payments to the IRS as business payments. A user doesn’t need to have a big business or a storefront or employees to be subject to these rules. If a user mows grass, babysits, cuts hair, or provides any other good or service, and receives payment of more than $600 in a year through a P2P platform, the platform will report the payments to the IRS.

And it works the other way too. If a user is running a business and making payments through a P2P platform or otherwise for business purposes, the user has an obligation to file a Form 1099 to report those persons or entities to whom the user paid more than $600 for goods or services in a calendar year.

It is always important for a business owner to properly document and keep detailed records of expenses of operating their business, including any payments made through P2P platforms. The IRS considers the use of a P2P payment platform to pay bills the same as paying cash. By itself, proof of payment through a P2P platform is still an unsubstantiated payment. The business owner needs additional documentation such as invoices, receipts, or expense reports to support the business purpose of such payments.

Please contact one of our tax and business attorneys at 937-223-1130 or Jsenney@pselaw.com.

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IRS Criminal Investigation Group (IRS-CI) is the criminal investigative arm of the IRS.  IRS-CI is responsible for conducting financial crime investigations, including tax fraud, narcotics trafficking, money laundering, public corruption, healthcare fraud, identity theft, and more.  IRS-CI special agents are the only federal law enforcement agents with investigative jurisdiction over violations of the Internal Revenue Code, boasting a nearly 90 percent federal conviction rate. The agency has 20 field offices located across the U.S. and 11 posts abroad.

The IRS Criminal Investigation Group (IRS-CI) has listed its top 10 cases for 2021 on its Twitter account (yes even the IRS uses Twitter).  These cases include the IRS’s most high-profile investigations.
According to IRS_CI Chief Jim Lee, “The investigative work of 2021 has all the makings of a made-for-TV movie – embezzlement of funds from a nonprofit, a family fraud ring that stole millions in COVID-relief funds and a $1 billion Ponzi scheme used to buy sports teams and luxury vehicles.”  But this is real life, and the IRS-CI agents are aggressively pursuing these cases to ensure the perpetrators are prosecuted.

The top 10 IRS-CI cases of 2021 include:
10.  An Albuquerque couple, Susan Harris and William Harris, who were both sentenced to 47 and 15 years in federal prison, respectively for stealing funds from a nonprofit organization that provided guardianship, conservatorship, and financial management to hundreds of people with special needs.

9.  A Rochester man, John Piccarreto Jr., who was sentenced to 84 months in federal prison and ordered to pay restitution totaling almost $20 million after he was convicted of conspiracy to commit mail fraud and filing a false tax return as part of an investment fraud Ponzi scheme.

8.  Two Orlando sisters, Petra Gomez and Jakeline Lumucso, who were sentenced to eight and four years in federal prison, respectively for operating a tax preparation business with five locations in central Florida that filed more than 16,000 false tax returns for clients from 2012 to 2016 with a total estimated loss to the IRS of $25 million.

7.  A Russian banker, Oleg Tinkov, aka Oleg Tinkoff, who was ordered to pay more than $248 million in taxes and sentenced to time served and one year of supervised release after he renounced his U.S. citizenship in an effort to conceal large stock gains that were reportable to the IRS after the company he founded became a multibillion-dollar, publicly traded company.

6.  An Ontario man, Hugo Sergio Mejia, who was sentenced to three years in federal prison and required to forfeit all assets derived from running an unlicensed business where he charged commissions for exchanging over $13 million in Bitcoin for cash, and vice versa, often for drug traffickers.

5.  Rossen G. Iossifov, a Bulgarian national, who was sentenced to 121 months in federal prison for participating in a scheme where popular online auction and sales websites — such as Craigslist and eBay — falsely advertised high-cost goods (typically vehicles) that did not actually exist. Once victims sent payment for the goods, the conspiracy engaged in a complicated money laundering scheme where US-based associates would accept victim funds, convert these funds to cryptocurrency, and transfer the cryptocurrency to foreign-based money launderers.

4.  Kent R.E. Whitney, the ex-pastor of the Church of the Health Self, was sentenced to 14 years in federal prison and ordered to pay restitution to victims after defrauding investors of $33 million by orchestrating a church-based investment scam. At his direction, church representatives appeared on television and at live seminars to make false and misleading claims to lure investors to invest in church entities. Victims received fabricated monthly statements reassuring them that their funds had been invested when in reality, little to no money was ever invested.

3.  A Prairie View man was sentenced to 12 years and six months in federal prison and ordered to pay over $8 million in restitution to the IRS after selling false information or fictitious debts to payday loan businesses and not filing federal tax returns for himself or his businesses for multiple years.

2.  Jeff Carpoff, owner of California-based DC Solar, was sentenced to 30 years in federal prison and ordered to forfeit $120 million in assets to the U.S. government for victim restitution after creating a Ponzi scheme that involved the sale of thousands of manufactured mobile solar generator units that didn’t exist. He committed account and lease revenue fraud and purchased a sports team, luxury vehicles, real estate, and a NASCAR team with the proceeds.

1.  San Fernando Valley family members received sentences ranging from 17.5 years in prison to 10 months of probation for crimes ranging from bank and wire fraud to aggravated identity theft. The family used stolen and fictitious identities to submit 150 fraudulent applications for COVID-relief funds based on phony payroll records and tax documents to the Small Business Administration, and then used the funds they received to purchase luxury homes, and gold coins, jewelry designer handbags, and more.  Richard Ayvazyan and his wife Terabelian cut their ankle monitoring devices and absconded prior to their sentencing hearing and are currently fugitives.

If you need assistance with any federal or state income tax issue or any other legal matter, please contact your business and tax attorney at 937-223-1130 or Jsenney@pselaw.com.

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In the event an inadvertent termination event occurs, the taxpayer can request an inadvertent termination ruling under IRC section 1362(f).  Subject to IRS approval, the corporation may be permitted to retain its “S” corporation status.

A corporation’s status as an “S” corporation terminates effective on the date that the company commits the act that triggers the termination. After termination, the corporation is not eligible to elect “S” corporation status for five years.

In the event of a termination, the corporation should attach to its return for the tax year in which the termination occurs a notification that a termination has occurred and the date of the termination.

If an “S” corporation inadvertently terminates its “S” corporation status, the IRS may grant relief. The corporation must demonstrate that the termination was inadvertent.

The IRS may provide restore the corporation’s “S” status retroactively to the date of the termination event, if:

1. The corporation previously made a valid “S” election and the election was terminated
2. The loss of the S election status was triggered by an inadvertent act
3. The IRS determines that the termination was inadvertent
4. Steps are taken within a reasonable period to correct the condition that rendered the corporation ineligible to be an “S” corporation
5. The corporation and shareholders agree to make any adjustments the IRS requires that are consistent with the treatment of the corporation as an S corporation

Factors that would tend to support the inadvertence of the termination event would include:

1. The terminating event was not reasonably within the control of the corporation
2. There was no plan to terminate the “S” election
3. The terminating event occurred without the corporation’s knowledge
4. The corporation and its shareholders had safeguards in place intended to prevent such a termination

If you would like assistance with fixing an inadvertent termination of “S” corporation status or need help with any other federal or state income tax matter, please contact one of our tax and business attorneys at 937-223-1130 or Jsenney@pselaw.com.

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Many small business owners set up their own LLC or use someone like Legal Zoom to do it. These owners often end up with the typical form of Operating Agreement for the LLC. This may be appropriate if the LLC is intended to be treated as a partnership for federal income tax purposes.  But this is not appropriate if the LLC is intended to be taxed as a corporation or an “S” corporation.

The typical LLC Operating Agreement includes provisions regarding capital account maintenance, partnership minimum gain, qualified income offsets, regulatory allocations under Internal Revenue Code (“IRC”) section 704, and other provisions intended to comply with the IRC partnership tax requirements. This is absolutely appropriate if the LLC is to be treated as a partnership for income tax purposes.  But this is absolutely wrong if the LLC is intended to be treated as an “S” corporation for tax purposes.“S” corporations may only have one class of stock (although differences in voting power are ignored). This one class of stock requirement means that all distributions from the LLC to the owners must be made pro-rata based on ownership.

In Private Letter Ruling 202203002 released 1/21/22, the IRS found that the partnership tax provisions in an LLC Operating Agreement, which caused or permitted distributions to be made in a manner other than pro-rata based on ownership, resulted in the LLC having a second class of stock. As a result, the IRS found that the LLC’s status as an “S” corporation was terminated.

Fortunately for the LLC owners, the IRS found, that the termination of the “S” election was inadvertent, and permitted the owners to correct the Operating Agreement to eliminate the partnership tax provisions and otherwise include language consistent with an “S” corporation.  The bad news, however, was that the LLC owners had to pay a user fee to get the IRS to make this determination.  The standard user fee for requesting such a ruling is now up to $30,000, and that does not include the cost of your legal and accounting professionals involved in the ruling process. Bottom line. Way smarter to get pay a few dollars upfront and get your LLC documents prepared by a professional.  Don’t take a chance on doing it yourself or relying on Legal Zoom or a similar low-cost provider.

If you would like to discuss setting up an LLC, “S” corporation, or other forms of entity, or have any questions regarding any other legal or tax matter, please contact your tax or business attorney at 937-223-1130 or Jsenney@pselaw.com.

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