Userid: CPM Schema: tipx Leadpct: 100% Pt. size: 8 Draft Ok to Print AH XSL/XML Fileid: … ns/P3402/201912/A/XML/Cycle04/source (Init. & Date) _______ Page 1 of 7 15:39 - 8-Mar-2020 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. Publication 3402 (Rev. March 2020) Contents Cat. No. 27940D Reminder Department of the Introduction Treasury Internal Taxation of What Is a Limited Liability Revenue Company? Service Limited Liability Classification of an LLC LLCs Classified as Partnerships Companies LLCs Classified as Disregarded Entities LLCs Classified as Corporations Subsequent Elections Community Property How To Get Tax Help Index Reminder Photographs of missing children. The Inter- nal Revenue Service is a proud partner with the National Center for Missing and Exploited Chil- dren. Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Introduction This publication provides federal income, em- ployment, and excise tax information for limited liability companies. This publication doesn't ad- dress state law governing the formation, opera- tion, or termination of limited liability companies. This publication doesn't address any state taxes. Comments and suggestions. We welcome your comments about this publication and your suggestions for future editions. You can send us comments through IRS.gov/FormComments. Or, you can write to: Internal Revenue Service, Tax Forms and Pub- lications, 1111 Constitution Ave. NW, IR-6526, Washington, DC 20224. Although we can’t respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax forms, instructions, and publi- cations. We can’t answer tax questions sent to the above address. Tax questions. If you have a tax question not answered by this publication or How To Get Tax Help section at the end of this publication, Get forms and other information faster and easier at: go to the IRS Interactive Tax Assistant page at • IRS.gov (English) • IRS.gov/Korean (한국어) IRS.gov/Help/ITA where you can find topics us- • IRS.gov/Spanish (Español) • IRS.gov/Russian (Pусский) ing the search feature or by viewing the catego- • IRS.gov/Chinese (中文) • IRS.gov/Vietnamese (TiếngViệt) ries listed. Mar 08, 2020 |
Page 2 of 7 Fileid: … ns/P3402/201912/A/XML/Cycle04/source 15:39 - 8-Mar-2020 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. Getting tax forms, instructions, and pub federal income tax purposes. An LLC with only basis in the assets attributable to Ethel's lications. Visit IRS.gov/Forms to download one member is treated as an entity that is disre- one-half interest in the partnership is $10,000, current and prior-year forms, instructions, and garded as separate from its owner for income the purchase price for Ethel's partnership inter- publications. tax purposes (but as a separate entity for pur- est. Upon the termination of the partnership, poses of employment tax and certain excise Francis is considered to receive a distribution of Ordering forms and publications. Go to taxes). Also, an LLC's federal tax classification those assets attributable to Francis' former in- IRS.gov/OrderForms to order current forms, in- can subsequently change under certain default terest in the partnership. Francis must recog- structions, and publications; call 800-829-3676 rules discussed later. nize gain or loss, if any, on the deemed distribu- to order prior-year forms and instructions. Your tion of the assets to the extent required by order should arrive within 10 business days. Elected classification. An LLC can elect to be section 731(a). See Partnership Distributions in classified as an association taxable as a corpo- Pub. 541. Useful Items ration or as an S corporation. After an LLC has You may want to see: determined its federal tax classification, it can Example 2. George and Henrietta are later elect to change that classification. For de- members of an LLC classified as a partnership Publication tails, see Subsequent Elections, later. for federal tax purposes. Each holds an equal membership interest. The LLC doesn't hold any 15 15 (Circular E), Employer's Tax Guide unrealized receivables or substantially appreci- 334 334 Tax Guide for Small Business LLCs Classified as ated inventory. George and Henrietta each sell their entire interests in the LLC to Ian, an unre- 505 505 Tax Withholding and Estimated Tax Partnerships lated person, in exchange for $10,000. After the 535 535 Business Expenses sale, the business is continued by the LLC, If an LLC has at least two members and is clas- which is owned solely by Ian. No entity classifi- 541 541 Partnerships sified as a partnership, it generally must file cation election is made after the sale to treat the 542 542 Corporations Form 1065, U.S. Return of Partnership Income. LLC as a corporation for federal tax purposes. Generally, an LLC classified as a partnership is The partnership terminates when Ian purchases 544 544 Sales and Other Dispositions of subject to the same filing and reporting require- the entire interests of George and Henrietta in Assets ments as partnerships. See the Instructions for the LLC. George and Henrietta must report gain 583 583 Starting a Business and Keeping Form 1065. or loss, if any, resulting from the sale of their Records partnership interests. For purposes of classify- Change in default classification. If the num- ing the acquisition by Ian, the partnership is 925 925 Passive Activity and At-Risk Rules ber of members in an LLC classified as a part- deemed to make a liquidating distribution of its nership is reduced to only one member, it be- assets to George and Henrietta. Immediately Form (and Instructions) comes an entity disregarded as separate from following this distribution, Ian is deemed to ac- 1065 1065 U.S. Return of Partnership Income its owner under Regulations section quire, by purchase, all of the former partner- 301.7701-3(f)(2). However, if the LLC has ship's assets. 1120 1120 U.S. Corporation Income Tax made an election to be classified as a corpora- For more details see Rev. Rul. 99-6 and Return tion (discussed later) and that elective classifi- section 708. 1120-S 1120-S U.S. Income Tax Return for an S cation is in effect at the time of the change in Corporation membership, the default classification as a dis- regarded entity will not apply. LLCs Classified as 2553 2553 Election by a Small Business Other tax consequences of a change in Corporation membership, such as recognition of gain or Disregarded Entities 8832 8832 Entity Classification Election loss, are determined by the transactions through which an interest in the LLC is acquired Income tax. If an LLC has only one member See How To Get Tax Help near the end of this or disposed of. If a partnership that becomes a and is classified as an entity disregarded as publication for information about getting publi- disregarded entity as a result of a decrease in separate from its owner, its income, deductions, cations and forms. the number of members makes an election to gains, losses, and credits are reported on the be classified as a corporation, the applicable owner's income tax return. For example, if the deemed transactions discussed under Subse- owner of the LLC is an individual, the LLC's in- What Is a Limited quent Elections, later, apply. come and expenses would be reported on the following schedules filed with the owner's Form Liability Company? Example 1. Ethel and Francis are mem- 1040: bers of an LLC classified as a partnership for • Schedule C, Profit or Loss from Business For purposes of this publication, a limited liabil- federal tax purposes. Each holds an equal (Sole Proprietorship); ity company (LLC) is a business entity organ- membership interest. The LLC doesn't hold any • Schedule E, Supplemental Income and ized in the United States under state law. An unrealized receivables or substantially appreci- Loss; or LLC may be classified for federal income tax ated inventory. Ethel sells her entire interest in • Schedule F, Profit or Loss From Farming. purposes as a partnership, corporation, or an the LLC to Francis for $10,000. After the sale, entity disregarded as separate from its owner the business is continued by the LLC, which is Note. The LLC should not file an income by applying the rules in Regulations section owned solely by Francis. No entity classification tax return. 301.7701-3. election is made after the sale to treat the LLC The information in this publication applies to as a corporation for federal tax purposes. The Employment tax and certain excise taxes. LLCs in general, and different rules may apply partnership terminates when Francis buys A single-member LLC disregarded for income to special situations, including banks, insurance Ethel's entire interest. Ethel must treat the trans- tax purposes is considered a corporation for companies, or nonprofit organizations that are action as the sale of a partnership interest and employment tax and collection of income tax at LLCs or that own LLCs. Check your state's re- must report gain or loss, if any, resulting from source and certain excise tax purposes and quirements and the federal tax regulations for the sale of her partnership interest. must use its own name and identification num- further information. For purposes of determining the tax treat- ber for those purposes. ment of Francis, the partnership is deemed to See the employment and excise tax returns make a liquidating distribution of all of its assets and instructions, including the following, for to Ethel and Francis, and after this distribution, more information. Classification of an LLC Francis is treated as acquiring the assets • Form 637, Application for Registration (For deemed to have been distributed to Ethel in liq- Certain Excise Tax Activities) Default classification. An LLC with at least uidation of Ethel's partnership interest. Francis' two members is classified as a partnership for Page 2 Publication 3402 (March 2020) |
Page 3 of 7 Fileid: … ns/P3402/201912/A/XML/Cycle04/source 15:39 - 8-Mar-2020 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. • Form 720, Quarterly Federal Excise Tax tion, the LLC must provide the owner's SSN or For more details on the preceding two ex- Return EIN, not the LLC's EIN. amples, see Revenue Ruling 99-5, 1999-6 • Form 730, Monthly Tax Return for Wagers However, most new single-member LLCs I.R.B. 8. You can find Revenue Ruling 99-5 at (Section 4401 of the Internal Revenue classified as a disregarded entity will need to IRS.gov/pub/irs-irbs/irb99-06.pdf. Code) obtain an EIN for the LLC. An LLC will need an • Form 2290, Heavy Highway Vehicle Use EIN if it has any employees or if it will be re- Tax Return quired to file any of the excise tax forms listed LLCs Classified as • Form 11–C, Occupational Tax and Regis- above (see Employment tax and certain excise tration Return for Wagering taxes earlier). See Form SS-4, Application for Corporations • Form 8849, Claim for Refund of Excise Employer Identification Number, for information Taxes on applying for an EIN. An LLC with either a single member or more • Form 941, Employer’s Quarterly Federal than one member can elect to be classified as a Tax Return Change in default classification. If a sin- corporation rather than be classified as a part- For the purposes of determining certain ex- gle-member LLC classified as a disregarded nership or disregarded entity under the default ceptions from employment tax because of the entity for income tax purposes acquires an ad- rules discussed earlier. File Form 8832 to elect familial relationship or religious affiliation of the ditional member, it becomes a partnership un- classification as a C corporation. File Form employer and employee, the owner of the LLC der Regulations section 301.7701-3(f)(2). How- 2553 to elect classification as an S corporation. is considered the employer. Additionally, the ever, if the LLC has made an election to be An LLC electing classification as an S corpora- owner of the entity is subject to the withholding classified as a corporation (discussed later) and tion isn't required to file Form 8832 to elect clas- requirements imposed by section 3406 (backup that elective classification is in effect at the time sification as a corporation before filing Form withholding). of the change in membership, the default classi- 2553. By filing Form 2553, an LLC is deemed to fication as a partnership will not apply. have elected classification as a corporation in Self-employment tax. Generally an individual Other tax consequences of a change in addition to the S corporation classification. owner of a single-member LLC classified as a membership, such as recognition of gain or If the LLC elects to be classified as a disregarded entity isn't an employee of the LLC. loss, are determined by the transactions ! corporation by filing Form 8832, a copy Instead, the owner is subject to tax on the net through which an interest in the LLC is acquired CAUTION of the LLC's Form 8832 must be at- earnings from self-employment of the LLC or disposed of. If a disregarded entity that be- tached to the federal income tax return of each which is treated in the same manner as a sole comes a partnership as a result of an increase direct and indirect owner of the LLC for the tax proprietorship. Similarly, a partner in a partner- in the number of members makes an election to year of the owner that includes the date on ship that is the owner of a single-member LLC be classified as a corporation, the applicable which the election took effect. classified as a disregarded entity is not an em- deemed transactions discussed in Subsequent ployee of the LLC. Instead, the partner is sub- Elections, later, apply. Example 6. Classification as a corpora ject to the same self-employment tax rules as a tion without an S election. Wanda and Syl- partner of a partnership that does not own a dis- Example 4. Bart, who isn't related to Alain, regarded entity. buys 50% of Alain's interest in an LLC that is a vester are members of an LLC. They agree that disregarded entity for $5,000. Alain doesn't the LLC should be classified as a corporation Example 3. LLC is a disregarded entity contribute any portion of the $5,000 to the LLC. but don't want to elect to have the LLC be trea- owned by Irene. LLC has three employees Alain and Bart continue to operate the business ted as an S corporation. The LLC must file Form (Kent, Patricia, and Tex) and pays wages. LLC of the LLC as co-owners of the LLC. The LLC is 8832. is treated as an entity separate from its owner converted to a partnership when the new mem- for purposes of employment taxes. For the wa- ber, Bart, buys an interest in the disregarded Example 7. Classification as a corpora ges paid to Kent, Patricia, and Tex, LLC is liable entity from the owner, Alain. Bart's buying a tion with an S election. Evelyn and Carol are for income tax withholding, Federal Insurance 50% interest in Alain's ownership interest in the members of an LLC. They agree that the LLC Contributions Act (FICA) taxes, and Federal LLC is treated as Bart's buying a 50% interest in should be classified as an S corporation. The Unemployment Tax Act (FUTA) taxes. In addi- each of the LLC's assets, which are treated as LLC must file Form 2553 instead of Form 8832. tion, LLC must file under its name and EIN the owned directly by Alain for federal income tax If the LLC is classified as a corporation, it applicable employment tax returns; make timely purposes. Immediately thereafter, Alain and must file a corporation income tax return. If it is employment tax deposits; and file with the So- Bart are treated as contributing their respective a C corporation, it is taxed on its taxable income cial Security Administration and furnish to LLC's interests in those assets to a partnership in ex- and distributions to the members are includible employees (Kent, Patricia, and Tex) Forms change for ownership interests in the partner- in the members' gross income to the extent of W-2, Wage and Tax Statement. Irene is ship. Alain recognizes gain or loss from the the corporation's earnings and profits (double self-employed for purposes of the self-employ- deemed sale to Bart of the 50% interest in the taxation). If it is an S corporation, the corpora- ment tax. Thus, Irene is subject to self-employ- assets. Neither Alain nor Bart recognizes any tion is generally not subject to any income tax ment tax on her net earnings from self-employ- gain or loss as a result of the deemed contribu- and the income, deductions, gains, losses, and ment with respect to LLC's activities. Irene isn't tion of the assets to the partnership. credits of the corporation “pass through” to the an employee of LLC for purposes of employ- members. ment taxes. Because LLC is treated as a sole Example 5. Charles, who isn't related to proprietorship of Irene for income tax purposes, Danielle, contributes $10,000 to an LLC owned Corporations generally file either: Irene must report the income and expenses by Danielle for a 50% ownership interest in the • Form 1120; or from LLC on her Schedule C. Irene can also fig- LLC. The LLC uses all of the contributed cash • Form 1120-S. ure her self-employment tax and any deduction in its business. Charles and Danielle continue to for self-employment tax on Schedule SE (Form operate the business of the LLC as co-owners For more information on the income taxation 1040 or 1040-SR). of the LLC. The LLC is converted from a disre- of corporations and their shareholders, see garded entity to a partnership when Charles Pub. 542. For more information on the income Taxpayer identification number. For all in- contributes cash to the LLC. Charles' contribu- taxation of S corporations and their sharehold- come tax purposes, a single-member LLC clas- tion is treated as a contribution to a partnership ers, see the Instructions for Form 1120-S. sified as a disregarded entity must use the own- in exchange for an ownership interest in the er's social security number (SSN) or EIN. This partnership. Danielle is treated as contributing includes all information returns and reporting re- all of the assets of the LLC to the partnership in Subsequent Elections lated to income tax. For example, if a disregar- exchange for a partnership interest. Neither ded entity LLC that is owned by an individual is Charles nor Danielle recognizes gain or loss as An LLC can elect to change its classification. required to provide a Form W-9, Request for a result of the conversion of the disregarded en- Generally, once an LLC has elected to change Taxpayer Identification Number and Certifica- tity to a partnership. its classification, it can't elect again to change its classification during the 60 months after the Publication 3402 (March 2020) Page 3 |
Page 4 of 7 Fileid: … ns/P3402/201912/A/XML/Cycle04/source 15:39 - 8-Mar-2020 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. effective date of the election. An election by a Tax reform. Tax reform legislation affects indi- newly formed LLC that is effective on the date viduals, businesses, and tax-exempt and gov- of formation isn't considered a change for pur- How To Get Tax Help ernment entities. Go to IRS.gov/TaxReform for poses of this limitation. For more information information and updates on how this legislation and exceptions, see Regulations section If you have questions about a tax issue, need affects your taxes. 301.7701-3(c) and the Form 8832 instructions. help preparing your tax return, or want to down- load free publications, forms, or instructions, go IRS social media. Go to IRS.gov/SocialMedia An election to change classification can to IRS.gov and find resources that can help you to see the various social media tools the IRS have significant tax consequences based on right away. uses to share the latest information on tax the following transactions that are deemed to changes, scam alerts, initiatives, products, and occur as a result of the election. Preparing and filing your tax return. After services. At the IRS, privacy and security are receiving your wage and earning statements paramount. We use these tools to share public Partnership to corporation. An election to (Form W-2, W-2G, 1099-R, 1099-MISC) from information with you. Don’t post your social se- change classification from a partnership to a all employers and interest and dividend state- curity number or other confidential information corporation will be treated as if the partnership ments from banks (Forms 1099), you can find on social media sites. Always protect your iden- contributed all of its assets and liabilities to the free options to prepare and file your return on tity when using any social networking site. corporation in exchange for stock and the part- IRS.gov or in your local community if you qual- nership then immediately liquidated by distribut- ify. The following IRS YouTube channels pro- ing the stock to its partners. The Volunteer Income Tax Assistance vide short, informative videos on various tax-re- For more information, see Partnership Distri- (VITA) program offers free tax help to people lated topics in English, Spanish, and ASL. butions in Pub. 541 and Property Exchanged for with low-to-moderate incomes, persons with • Youtube.com/irsvideos. Stock in Pub. 542. disabilities, and limited-English-speaking tax- • Youtube.com/irsvideosmultilingua. payers who need help preparing their own tax • Youtube.com/irsvideosASL. Corporation to partnership. An election to returns. The Tax Counseling for the Elderly change classification from a corporation to a (TCE) program offers free tax help for all tax- Watching IRS videos. The IRS Video portal partnership will be treated as if the corporation payers, particularly those who are 60 years of (IRSVideos.gov) contains video and audio pre- distributed all of its assets and liabilities to its age and older. TCE volunteers specialize in an- sentations for individuals, small businesses, shareholders in liquidation and the sharehold- swering questions about pensions and retire- and tax professionals. ers then immediately contributed all of the dis- ment-related issues unique to seniors. Getting tax information in other languages. tributed assets and liabilities to a new partner- You can go to IRS.gov to see your options For taxpayers whose native language isn’t Eng- ship. for preparing and filing your return, which in- lish, we have the following resources available. For more information, see Contribution of clude the following. Taxpayers can find information on IRS.gov in Property in Pub. 541 and Distributions to Share- • Free File. Go to IRS.gov/FreeFile to see if the following languages. holders in Pub. 542. you qualify to use brand-name software to • Spanish IRS.gov/Spanish ( ). prepare and e-file your federal tax return • Chinese IRS.gov/Chinese ( ). Corporation to disregarded entity. An elec- for free. • Korean IRS.gov/Korean ( ). tion to change classification from a corporation • VITA. Go to IRS.gov/VITA, download the • Russian IRS.gov/Russian ( ). to a disregarded entity will be treated as if the free IRS2Go app, or call 800-906-9887 to • Vietnamese IRS.gov/Vietnamese ( ). corporation distributed all of its assets and lia- find the nearest VITA location for free tax bilities to its single owner in liquidation. return preparation. The IRS Taxpayer Assistance Centers For more information, see Distributions to • TCE. Go to IRS.gov/TCE, download the (TACs) provide over-the-phone interpreter serv- Shareholders in Pub. 542. free IRS2Go app, or call 888-227-7669 to ice in over 170 languages, and the service is find the nearest TCE location for free tax available free to taxpayers. Disregarded entity to corporation. An elec- return preparation. tion to change classification from a disregarded Getting tax forms and publications. Go to entity to a corporation will be treated as if the Employers can register to use Business IRS.gov/Forms to view, download, or print all of owner of the disregarded entity contributed all Services Online. The SSA offers online serv- the forms, instructions, and publications you of the assets and liabilities to the corporation in ice for fast, free, and secure online W-2 filing may need. You can also download and view exchange for stock. options to CPAs, accountants, enrolled agents, popular tax publications and instructions (in- For more information, see Property Ex- and individuals who process W-2s (Wage and cluding the 1040 and 1040-SR instructions) on changed for Stock in Pub. 542. Tax Statement) and W-2Cs (Statement of Cor- mobile devices as an eBook at no charge at rected Income and Tax Amounts). Employers IRS.gov/eBooks. Or you can go to IRS.gov/ can go to SSA.gov/employer for more informa- OrderForms to place an order and have them Community Property tion. mailed to you within 10 business days. Getting answers to your tax ques- Access your online account (individual tax- A married couple may choose to treat a busi- tions. On IRS.gov, get answers to your payers only). Go to IRS.gov/Account to se- ness entity as a partnership or as a disregarded tax questions anytime, anywhere. curely access information about your federal tax entity if: 1. The business entity is wholly owned by the • Go to IRS.gov/Help for a variety of tools account. couple as community property under the that will help you get answers to some of • View the amount you owe, pay online, or laws of a state, a foreign country, or pos- the most common tax questions. set up an online payment agreement. session of the United States; • Go to IRS.gov/ITA for the Interactive Tax • Access your tax records online. Assistant, a tool that will ask you questions • Review the past 24 months of your pay- 2. No person other than one or both spouses on a number of tax law topics and provide ment history. would be considered an owner for federal answers. You can print the entire interview • Go to IRS.gov/SecureAccess to review the tax purposes; and and the final response for your records. required identity authentication process. 3. The business entity isn't treated as a cor- • Go to IRS.gov/Forms to search for our poration under Regulations section forms, instructions, and publications. You Using direct deposit. The fastest way to re- 301.7701–2. will find details on 2019 tax changes and ceive a tax refund is to combine direct deposit hundreds of interactive links to help you and IRS e-file. Direct deposit securely and elec- A change in reporting position will be treated find answers to your questions. tronically transfers your refund directly into your as a conversion of the entity. • You may also be able to access tax law in- formation in your electronic filing software. Page 4 Publication 3402 (March 2020) |
Page 5 of 7 Fileid: … ns/P3402/201912/A/XML/Cycle04/source 15:39 - 8-Mar-2020 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. financial account. Eight in 10 taxpayers use di- • Download the official IRS2Go app to your you’ll know in advance that you can get the rect deposit to receive their refund. The IRS is- mobile device to check your refund status. service you need without long wait times. Be- sues more than 90% of refunds in less than 21 • Call the automated refund hotline at fore you visit, go to IRS.gov/TACLocator to find days. 800-829-1954. the nearest TAC, check hours, available serv- ices, and appointment options. Or, on the Getting a transcript or copy of a return. The Making a tax payment. The IRS uses the lat- IRS2Go app, under the Stay Connected tab, quickest way to get a copy of your tax transcript est encryption technology to ensure your elec- choose the Contact Us option and click on “Lo- is to go to IRS.gov/Transcripts. Click on either tronic payments are safe and secure. You can cal Offices.” “Get Transcript Online” or “Get Transcript by make electronic payments online, by phone, Mail” to order a copy of your transcript. If you and from a mobile device using the IRS2Go prefer, you can order your transcript by calling app. Paying electronically is quick, easy, and The Taxpayer Advocate 800-908-9946. faster than mailing in a check or money order. Service (TAS) Is Here To Go to IRS.gov/Payments to make a payment Help You Using online tools to help prepare your re- using any of the following options. turn. Go to IRS.gov/Tools for the following. • IRS Direct Pay: Pay your individual tax bill What Is TAS? • The Earned Income Tax Credit Assistant or estimated tax payment directly from (IRS.gov/EITCAssistant) determines if your checking or savings account at no TAS is an independent organization within the you’re eligible for the EIC. cost to you. IRS that helps taxpayers and protects taxpayer • The Online EIN Application IRS.gov/EIN ( ) • Debit or Credit Card: Choose an approved rights. Their job is to ensure that every taxpayer helps you get an employer identification payment processor to pay online, by is treated fairly and that you know and under- number. phone, and by mobile device. stand your rights under the Taxpayer Bill of • The Tax Withholding Estimator IRS.gov/ ( • Electronic Funds Withdrawal: Offered only Rights. W4app) makes it easier for everyone to when filing your federal taxes using tax re- pay the correct amount of tax during the turn preparation software or through a tax How Can You Learn About Your year. The Estimator replaces the Withhold- professional. Taxpayer Rights? ing Calculator. The redesigned tool is a • Electronic Federal Tax Payment System: convenient, online way to check and tailor Best option for businesses. Enrollment is The Taxpayer Bill of Rights describes 10 basic your withholding. It’s more user-friendly for required. rights that all taxpayers have when dealing with taxpayers, including retirees and self-em- • Check or Money Order: Mail your payment the IRS. Go to TaxpayerAdvocate.IRS.gov to ployed individuals. The new and improved to the address listed on the notice or in- help you understand what these rights mean to features include the following. structions. you and how they apply. These are your rights. – Easy to understand language; • Cash: You may be able to pay your taxes Know them. Use them. – The ability to switch between screens, with cash at a participating retail store. correct previous entries, and skip • Same-Day Wire: You may be able to do What Can TAS Do For You? screens that don’t apply; same-day wire from your financial institu- – Tips and links to help you determine if tion. Contact your financial institution for TAS can help you resolve problems that you you qualify for tax credits and deduc- availability, cost, and cut-off times. can’t resolve with the IRS. And their service is tions; free. If you qualify for their assistance, you will – A progress tracker; What if I can’t pay now? Go to IRS.gov/ be assigned to one advocate who will work with – A self-employment tax feature; and Payments for more information about your op- you throughout the process and will do every- – Automatic calculation of taxable social tions. thing possible to resolve your issue. TAS can security benefits. • Apply for an online payment agreement help you if: • The First Time Homebuyer Credit Account (IRS.gov/OPA) to meet your tax obligation • Your problem is causing financial difficulty Look-up IRS.gov/HomeBuyer ( ) tool pro- in monthly installments if you can’t pay for you, your family, or your business; vides information on your repayments and your taxes in full today. Once you complete • You face (or your business is facing) an account balance. the online process, you will receive imme- immediate threat of adverse action; or • The Sales Tax Deduction Calculator diate notification of whether your agree- • You’ve tried repeatedly to contact the IRS (IRS.gov/SalesTax) figures the amount you ment has been approved. but no one has responded, or the IRS can claim if you itemize deductions on • Use the Offer in Compromise Pre-Qualifier hasn’t responded by the date promised. Schedule A (Form 1040 or 1040-SR), to see if you can settle your tax debt for choose not to claim state and local income less than the full amount you owe. For taxes, and you didn’t save your receipts more information on the Offer in Compro- How Can You Reach TAS? showing the sales tax you paid. mise program, go to IRS.gov/OIC. TAS has offices in every state, the District of Columbia, and Puerto Rico. Your local advo- Resolving tax-related identity theft issues. Checking the status of an amended return. cate’s number is in your local directory and at • The IRS doesn’t initiate contact with tax- Go to IRS.gov/WMAR to track the status of TaxpayerAdvocate.IRS.gov/Contact-Us. You payers by email or telephone to request Form 1040-X amended returns. Please note can also call them at 877-777-4778. personal or financial information. This in- that it can take up to 3 weeks from the date you cludes any type of electronic communica- mailed your amended return for it to show up in tion, such as text messages and social me- our system, and processing it can take up to 16 How Else Does TAS Help dia channels. weeks. Taxpayers? • Go to IRS.gov/IDProtection for information. Understanding an IRS notice or letter. Go to TAS works to resolve large-scale problems that • If your SSN has been lost or stolen or you IRS.gov/Notices to find additional information affect many taxpayers. If you know of one of suspect you’re a victim of tax-related iden- about responding to an IRS notice or letter. these broad issues, please report it to them at tity theft, visit IRS.gov/IdentityTheft to learn IRS.gov/SAMS. what steps you should take. Contacting your local IRS office. Keep in Checking on the status of your refund. mind, many questions can be answered on TAS also has a website, Tax Reform • Go to IRS.gov/Refunds. IRS.gov without visiting an IRS Tax Assistance Changes, which shows you how the new tax • The IRS can’t issue refunds before Center (TAC). Go to IRS.gov/LetUsHelp for the law may change your future tax filings and helps mid-February 2020 for returns that claimed topics people ask about most. If you still need you plan for these changes. The information is the EIC or the ACTC. This applies to the help, IRS TACs provide tax help when a tax is- categorized by tax topic in the order of the IRS entire refund, not just the portion associ- sue can’t be handled online or by phone. All Form 1040 or 1040-SR. Go to TaxChanges.us ated with these credits. TACs now provide service by appointment so for more information. Publication 3402 (March 2020) Page 5 |
Page 6 of 7 Fileid: … ns/P3402/201912/A/XML/Cycle04/source 15:39 - 8-Mar-2020 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. TAS for Tax Professionals Low Income Taxpayer collection disputes. In addition, clinics can pro- vide information about taxpayer rights and re- TAS can provide a variety of information for tax Clinics (LITCs) sponsibilities in different languages for individu- professionals, including tax law updates and als who speak English as a second language. guidance, TAS programs, and ways to let TAS LITCs are independent from the IRS. LITCs Services are offered for free or a small fee. To know about systemic problems you’ve seen in represent individuals whose income is below a find a clinic near you, visit IRS.gov/LITC or see your practice. certain level and need to resolve tax problems IRS Pub. 4134, Low Income Taxpayer Clinic with the IRS, such as audits, appeals, and tax List. Page 6 Publication 3402 (March 2020) |
Page 7 of 7 Fileid: … ns/P3402/201912/A/XML/Cycle04/source 15:39 - 8-Mar-2020 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. To help us develop a more useful index, please let us know if you have ideas for index entries. Index See “Comments and Suggestions” in the “Introduction” for the ways you can reach us. Recognition of gain or loss 2 3, Employment tax 2 Social security A Classification as a corporation 3 Excise taxes 2 number (See Taxpayer Assistance (See Tax help) Classification as a disregarded identification number) entity 2 Subchapter S election 3 Classification as a partnership 2 I C Classification election 3 Identity theft 5 Change in classification: Classification of an LLC: T Disregarded entity to Default classification 2 Tax help 4 corporation 3 Elected classification 2 P Taxpayer identification Disregarded entity to Publications (See Tax help) number 3 partnership 3 Partnership to corporation 3 E Partnership to disregarded Employer identification S entity 2 3, number (See Taxpayer Self-employment tax 3 identification number) Publication 3402 (March 2020) Page 7 |