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             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



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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 
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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 
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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.

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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.

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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.

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                   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






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