How to file taxes for Multi-Member LLC after incorrectly filing EIN as Single-Member LLC?

Thanks for the explanation! I have a similar situation but we've been operating for almost 2 years now. Is there a time limit on when you can file the Form 8832 to correct this kind of mistake? Will we face penalties for the previous tax year we already filed?

There's generally a 3-year window for making a retroactive entity classification election, so you should still be within that timeframe for a business operating for 2 years. You'll need to submit a written statement explaining the reasonable cause for filing late with your Form 8832. For the previous tax year, if you already filed as a single-member LLC (disregarded entity) but operated as a partnership, you may need to file amended returns after making the classification election. The good news is that penalties are typically minimal or waived entirely when there's a reasonable cause for the correction, like a genuine misunderstanding of the filing requirements.

How long did the analysis take? I'm on a tight deadline before the next quarterly filing is due, and I need to get this fixed ASAP. Does the system just analyze documents or do they connect you with a human expert?

I'm a bit skeptical about these tax tools. Did you still need your accountant to review everything, or were you able to file the Form 8832 yourself with just what they provided? And does it cover state tax implications too, or just federal?

The analysis was completed in about 45 minutes. The system is AI-based so it works pretty quickly compared to waiting for a human tax professional to review everything. For urgent situations like yours, it's definitely faster than trying to book an appointment with a specialist. I ended up filing the Form 8832 myself using their instructions and pre-filled form. My accountant reviewed it but didn't need to make any changes. It definitely covered state tax implications too - it specifically explained how our state (California) treats different entity classifications and what additional forms we needed for state compliance after making the federal election.

How does this actually work? Do they just call for you and then transfer the call once they get through? I'm confused how they're able to get through faster than regular callers.

This sounds too good to be true. The IRS wait times are horrendous for everyone. How could some random service possibly get through faster? Are they using some kind of corporate priority line or something? Seems sketchy to me.

They use an automated system that continuously calls and navigates the IRS phone tree until it gets through. Once a representative answers, you get a call connecting you to that representative. You don't have to sit on hold for hours - they do that part for you. They don't have any special access or priority line - they're just using technology to handle the frustrating part of waiting on hold. Once you're connected, it's a direct conversation between you and the actual IRS representative, just like if you had called yourself and waited. The difference is you only join the call once there's a human ready to talk to you.

I went through this exact scenario and yes, we did get audited, but not because of the entity classification correction. The auditor actually told us that making a voluntary correction with Form 8832 is viewed positively. However, they did scrutinize our partnership allocations carefully since we had been inconsistent in prior years. Make sure your operating agreement clearly documents your 50/50 split and that your actual distributions match what you're reporting.

That's really helpful to know - thank you! Were you able to prove the partnership allocations just with the operating agreement or did you need additional documentation? Our actual distributions weren't exactly 50/50 in practice because my partner took some draws for personal expenses.

Filing Form 8832 to properly classify as a partnership won't change your self-employment tax situation. As partners in a partnership, you'll still each pay self-employment taxes on your distributive shares of the partnership's ordinary business income, reported on Schedule K-1 and then transferred to your personal returns. The main difference is that you'll be filing a partnership return (Form 1065) with K-1s instead of having business income flow through on Schedule C of one partner's personal return. Both methods require paying self-employment tax, so the tax amount itself shouldn't change significantly if your income split remains the same.

Thanks for clarifying! That makes sense. One more question - does the partnership return have a different filing deadline than individual returns? I want to make sure we get everything sorted in time.

Yes, partnership returns (Form 1065) have a different deadline than individual returns. Partnership returns are due on March 15th (compared to April 15th for individual returns), but you can get an automatic 6-month extension by filing Form 7004, which would extend the deadline to September 15th. The earlier deadline exists because partnerships need to issue K-1s to partners so they can complete their individual tax returns by April 15th. Since you're correcting your classification mid-stream, I'd recommend filing for the extension to give yourself extra time to get everything properly sorted out, especially if you're dealing with amended returns from previous years.

This is really helpful advice! I'm dealing with the same situation right now. When you filed Form 8832 with the retroactive election, did you also have to file amended returns for previous years? And how detailed did your explanation letter need to be - did you just explain it was an honest mistake when applying for the EIN, or did you need to provide more documentation about your actual business operations?

We didn't need to file amended returns for previous years since we made the election retroactive to our formation date. The IRS treated it as if we had been properly classified from the beginning, so our original tax filings were considered correct under the new classification. For the explanation letter, we kept it straightforward but included key details: we explained it was an honest mistake during the EIN application process, attached copies of our operating agreement showing the 50/50 partnership structure from day one, and included bank account documentation showing both partners making initial capital contributions. We also referenced specific business transactions (like property purchases) that clearly demonstrated multi-member operations from the start. The IRS accepted our reasonable cause explanation without requesting additional documentation. The key is showing that you genuinely operated as a partnership from the beginning and that the single-member classification was purely an administrative error, not an attempt to avoid taxes or misrepresent your business structure.