Form 8832: Entity Classification Election and 60-Month Lock-In

Form 8832 is the one-page IRS election an eligible business entity uses to choose how it will be taxed at the federal level. An LLC can use it to be treated as a corporation, a partnership, or a disregarded entity, regardless of how the business was organized under state law.¹ If you don’t file it, the IRS assigns a default classification based on how many owners you have (and, for foreign entities, whether those owners have limited liability). You only need Form 8832 when the default isn’t what you want.

Who Can File

The form is limited to what the IRS calls “eligible entities.” In practice that means LLCs, general partnerships, and certain other unincorporated business structures. It cannot change the classification of a “per se” corporation, which is any entity already locked into corporate status by law.²

Entities automatically treated as corporations, and therefore ineligible, include:

Businesses organized under a federal or state statute that calls them a corporation, body corporate, or body politic.
Joint-stock companies or associations organized under state statute.
State-chartered banks with deposits insured under the Federal Deposit Insurance Act.
Entities wholly owned by a state or its political subdivisions.
Entities that the Internal Revenue Code classifies as corporations under other provisions, such as certain publicly traded partnerships.³

One wrinkle: an entity that previously elected corporate status through Form 8832 can later file a new Form 8832 to switch back, subject to the 60-month waiting period below.

Check Your Default Classification First

Every eligible entity already has a default. Filing Form 8832 makes sense only if you want to override it.

A domestic eligible entity with two or more owners defaults to partnership. A domestic single-owner eligible entity defaults to disregarded, meaning the IRS ignores the entity and treats the owner as directly owning the business assets.²

Foreign entities work differently. Defaults there depend on whether the owners have limited liability. A foreign eligible entity with all-limited-liability owners defaults to a corporation; if at least one owner lacks limited liability, a multi-owner entity defaults to partnership and a single-owner entity defaults to disregarded.² A foreign parent that owns a U.S. LLC and assumes it is disregarded can be in for a surprise. If the parent has limited liability, that LLC may default to corporate treatment, and filing Form 8832 early is the cleanest way to fix it.

How to Complete Form 8832

Before You Start

You need the entity’s legal name, mailing address, and Employer Identification Number. The IRS will not process Form 8832 without an EIN, and the instructions specifically say not to write “Applied For” on the EIN line.² If you don’t have one, apply on Form SS-4 and wait for the number before filing.⁴

Part I

Line 6 is where you pick the classification you want: association taxable as a corporation, partnership, or disregarded entity. You also report your current classification. Foreign entities enter a country of organization on Line 7.

Line 8 is the effective date. It cannot be more than 75 days before the filing date, and it cannot be more than 12 months after.² Leaving Line 8 blank makes the election effective on the filing date. For a January 1 effective date, that means filing between October 18 of the prior year and March 16 of the current year.

Signatures

The form must be signed by each owner at the time of filing, or by an officer, manager, or member authorized under local law or the entity’s organizational documents to make the election. If you are backdating the election, every person who was an owner between the requested effective date and the filing date must also sign, even if they are no longer owners.² Tracking down former owners after the fact is a common problem with retroactive elections, so line up signatures before you file.

Where to Send It

Form 8832 is filed by mail. There is no electronic filing option. The address depends on where the entity is located:

Eastern U.S. states (Connecticut through Wisconsin, including the District of Columbia): Department of the Treasury, Internal Revenue Service, Kansas City, MO 64999.
Western U.S. states (Alabama through Wyoming): Department of the Treasury, Internal Revenue Service, Ogden, UT 84201.
Foreign entities: Department of the Treasury, Internal Revenue Service, Ogden, UT 84201-0023.

The IRS mails an acceptance or nonacceptance letter to the address on the form, typically within 60 days. If nothing arrives after 60 days, call 1-800-829-0115 or follow up by certified mail.⁵ You also need to attach a copy of the accepted form to the entity’s federal return for the year the election takes effect. If the entity isn’t required to file its own return, the owner attaches the copy to their personal return.

What Each Classification Means

The classification you choose determines which return you file, how income reaches owners, and what rates apply.

Corporation

Electing corporate status means the entity files Form 1120 and pays tax at the corporate level. Distributions to shareholders are taxed again on their returns as dividends. This double taxation is the defining feature of C-corp status and the reason most small businesses avoid it unless they have a specific reason to want it, such as retaining earnings at the corporate rate or raising outside capital.

Partnership

A partnership files Form 1065 as an information return but pays no federal income tax itself. Each partner receives a Schedule K-1 for their share of income, deductions, and credits and reports those amounts on their own return.⁶ Partners generally owe self-employment tax on their share of trade or business income, with some exceptions for limited partners.

Disregarded Entity

Only single-owner entities can elect this. The IRS treats the entity as if it doesn’t exist for income tax. An individual owner reports business income on Schedule C of Form 1040.⁷ A corporate owner reports the activity as a branch on its Form 1120. Individual owners pay self-employment tax on net earnings, just like a sole proprietor.⁸

One boundary worth flagging: a disregarded entity is still a separate entity for employment and certain excise taxes. If your LLC has employees, the LLC itself must withhold income tax, pay FICA and FUTA, file Forms 941 and 940, and issue W-2s under its own name and EIN.⁹ The same applies to excise taxes on Forms 720, 730, 2290, and 11-C.

What About S-Corp Status

Many LLC owners want S-corp treatment and assume they need Form 8832 first, then Form 2553. They don’t. An eligible LLC can file Form 2553 directly, and the IRS treats a timely S-corp election as an automatic deemed election to be classified as a corporation. No separate Form 8832 is required.¹⁰

The Deemed Transactions You May Not Expect

Changing classification isn’t just paperwork. The IRS treats the change as if specific real transactions took place, and those transactions can generate tax.

When a disregarded entity elects corporate status, the IRS treats the owner as contributing all of the entity’s assets and liabilities to a new corporation in exchange for stock.⁸ This usually qualifies as a tax-free exchange under Section 351, but if liabilities exceed the tax basis of the contributed assets, gain can be recognized.

Going the other direction is more dangerous. When a corporation elects partnership status, the IRS treats the corporation as liquidating and distributing all assets and liabilities to shareholders, who then contribute everything to a new partnership. When a corporation with one owner elects disregarded status, the deemed event is a full corporate liquidation to that owner.⁸ A deemed liquidation can trigger gain at both corporate and shareholder levels, and if the entity has appreciated assets or accumulated earnings, the bill can be substantial. Talk to a tax professional before switching away from corporate status.

The 60-Month Lock-In

Once an entity changes its classification through Form 8832, it generally cannot change again for 60 months from the effective date of the election.⁸ The IRS can permit an earlier change, but don’t count on it.

Two exceptions matter. An election by a newly formed entity that takes effect on the date of formation is not a “change” for purposes of this rule, so a brand-new LLC that elects corporate status on day one can later switch to partnership status without waiting five years. And a more-than-50-percent change in ownership interests can reset the clock, though the specifics depend on the facts and how the IRS reads the regulations.

If You Missed the Filing Window

Revenue Procedure 2009-41 offers streamlined relief for a late Form 8832 if you act within three years and 75 days of the intended effective date.¹¹ There is no user fee, but you have to meet all of the following:

The only reason the entity didn’t get its requested classification is that Form 8832 wasn’t filed on time.
The entity and all affected persons filed federal returns consistently with the intended classification for every year since the election was supposed to take effect.
Nobody filed a return inconsistent with the requested classification during that period.

The late-filed Form 8832 must include a statement explaining the reason for the delay and a declaration of eligibility under Rev. Proc. 2009-41, signed under penalties of perjury.¹¹

Consistent filing is where most requests fail. If the entity filed as a partnership one year and as a disregarded entity the next, the streamlined process is off the table and your only route is a private letter ruling, which carries a fee in the range of $14,000 to $15,000 and takes months.¹² If the election you filed was simply wrong rather than late, file a new Form 8832 with the correct information, subject to the 60-month rule.

Married Couples in Community Property States

Spouses who jointly own an LLC in a community property state have an extra option. Under Revenue Procedure 2002-69, if the LLC is wholly owned by the spouses as community property and no one else is considered an owner for federal tax purposes, the IRS will respect their choice to treat the entity as either a disregarded entity or a partnership.¹³ Treating it as disregarded lets the couple report business income on Schedule C of their joint return instead of filing Form 1065 and issuing K-1s. This is different from the qualified joint venture election, which isn’t available to businesses organized as an LLC or other state-law entity.

1
Internal Revenue Service. About Form 8832, Entity Classification Election
2
Internal Revenue Service. Form 8832 Entity Classification Election Instructions
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eCFR. 26 CFR 301.7701-2 – Business Entities; Definitions
4
Internal Revenue Service. Instructions for Form SS-4
5
Internal Revenue Service. Where to File Your Taxes for Form 8832
6
Internal Revenue Service. About Form 1065, U.S. Return of Partnership Income
7
Internal Revenue Service. Single Member Limited Liability Companies
8
Internal Revenue Service. Limited Liability Company – Possible Repercussions
9
Federal Register. Disregarded Entities; Employment and Excise Taxes
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Internal Revenue Service. Instructions for Form 2553
11
Internal Revenue Service. Rev. Proc. 2009-41
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Internal Revenue Service. Internal Revenue Bulletin 2026-01
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Internal Revenue Service. Election for Married Couples Unincorporated Businesses