Form 8832, the Entity Classification Election, is how an eligible business entity such as an LLC tells the IRS it wants to be taxed as a corporation, a partnership or a disregarded entity instead of its default classification. If you're happy with the default, you don't file it at all.
If you're happy with your LLC's default, you'll never need this form. The owners who do usually want corporate tax treatment, or they're changing course after the business has grown. Here's how the IRS rules work.
The default rules first
Unless an election is made, the IRS instructions say a domestic eligible entity is:
- A partnership if it has two or more members
- Disregarded as an entity separate from its owner if it has a single owner
The IRS adds a tip worth repeating: a new eligible entity shouldn't file Form 8832 if it will use its default classification. Filing it to confirm the default isn't needed.
When you'd file Form 8832
| Situation | File Form 8832? |
|---|---|
| Domestic LLC wants to be taxed as a corporation (a C corporation) | Yes |
| Domestic entity changing its current classification | Yes, even if it's currently on the default |
| LLC wants S corporation status | No, file Form 2553 instead |
| Single-member LLC happy to be disregarded | No |
| Foreign entity electing a classification | Yes, in the cases the instructions list |
The S corporation row is where people go wrong. The IRS says not to file Form 8832 for an entity electing to be an S corporation: a timely Form 2553 is treated as also electing corporate classification, so one form does both jobs.
Timing: the 75-day and 12-month window
The election's effective date can't be more than 75 days before the date you file it, and can't be more than 12 months after. If you pick an earlier date, the IRS says the election defaults to 75 days before filing; pick a later one and it takes effect 12 months after filing. So you can backdate a little, but not to the start of a year that ended months ago.
The 60-month lock
Once an entity elects to change its classification, it generally can't change again by election for 60 months after the effective date. The IRS can allow an earlier change by private letter ruling if more than 50% of the ownership is held by people who didn't own any of it at the time of the previous election. The lock doesn't apply to a newly formed entity's initial election effective from formation.
That's the insight I'd want before filing: a change you make to save tax this year can stop you changing back for five years, so model both directions first.
What a change of classification does for tax
An election isn't just a label. The Form 8832 instructions summarise what the IRS treats as happening on the effective date:
| Change | What the IRS treats as happening |
|---|---|
| Partnership to corporation | The partnership contributes its assets and liabilities to the corporation for stock, then liquidates by passing that stock to the partners |
| Corporation to partnership | The corporation distributes its assets and liabilities to its shareholders in liquidation, and they contribute them to a new partnership |
| Disregarded entity to corporation | The owner contributes all the assets and liabilities to the corporation in exchange for its stock |
| Corporation to disregarded entity | The corporation distributes its assets and liabilities to its single owner in liquidation |
Those deemed transactions can carry their own tax results, which is why the IRS points you to Regulations section 301.7701-3(g). Two smaller rules help with admin: an entity keeps its EIN when its classification changes, and a partnership automatically becomes a disregarded entity if its membership drops to one, without any election.
How to file it
- Use the entity's own EIN. The IRS says not to write "Applied For" on the form.
- Choose initial classification or change in classification, and answer the 60-month questions if you're changing.
- Pick the classification and the effective date, inside the 75-day and 12-month window.
- Have every owner sign the consent, or an authorised officer, manager or member if that's allowed.
- Send it to the IRS service center listed in the instructions for your state.
- Attach a copy to the entity's federal tax or information return for the year of the election.
The IRS says the entity should generally hear whether the election was accepted within 60 days. If you don't, chase it: the instructions warn you to make sure the IRS receives the election.
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Missed the deadline? Late election relief
Rev. Proc. 2009-41 relief lets an entity file late if it meets the conditions in the instructions, including reasonable cause for missing the deadline and filing within 3 years and 75 days of the requested effective date. You complete Part II of Form 8832 to claim it. Outside that route, the alternative is a private letter ruling, which comes with a user fee.
If you're still choosing a structure, my piece on LLC versus sole proprietorship lays out the options, and the best LLC formation services can set the company up for you.
My verdict
Form 8832 is a short form with long consequences. Leave it alone if the default suits you, use Form 2553 for S corporation status, and if you do elect corporate treatment, remember the 75-day backdating limit and the 60-month lock. Get the numbers checked before you sign, because undoing it isn't quick.
Frequently asked questions
What is Form 8832 used for?
It's the Entity Classification Election an eligible entity uses to choose to be taxed as a corporation, a partnership or a disregarded entity instead of its default classification.
Do I need Form 8832 for an S corp election?
No. The IRS says to file Form 2553 instead; a timely Form 2553 is treated as also electing corporate classification.
Does a new LLC need to file Form 8832?
Only if it wants a classification other than the default. A two-member LLC defaults to a partnership and a single-member LLC to a disregarded entity.
How far back can a Form 8832 election go?
No more than 75 days before the date it's filed, and no more than 12 months after.
How often can you change your entity classification?
Generally once every 60 months after the effective date of a change, unless the IRS allows an earlier change by private letter ruling.
Can I file Form 8832 late?
Possibly. Rev. Proc. 2009-41 relief can apply if the conditions are met, including filing within 3 years and 75 days of the requested effective date.
