Have a Tax Question? Ask a Tax Expert
Welcome and thank you for giving me the opportunity to assist you with your tax question.
An LLC is a disregarded entity for tax purposes. My advice would be to file as an S corp using Form 1120S and include a copy of the 2553 which you previously sent in to the IRS.
Could you answer the questions I listed above please. I can't just gamble and need to make and proper decision evaluating what the potential success rate of each is and why.
I am providing the best answer based on over 15 years of experience with IRS matters. To be honest, you can make 5 phone calls to the IRS asking the same question, speak to 5 different IRS representatives, and get 5 different answers. I do not believe that the IRS commissioner will give personal attention to your situation. It will be handled by an IRS representative.
Therefore, my advice to you remains the same. File as an S corporation and include the 2553 and/or a letter as your CPA suggested.
Please see the following for additional information regarding Form 2553.
You can ask for a "private letter ruling" regarding your situation OR you can mail in a copy of the 2553 to the service center who sent you the notice.
Please be assured your "problem" is fixable.
What should I do first? Send a second letter to the service center asking for a private letter ruling or review?
What would get the fastest reply? I'm trying to avoid extra costs and if I file as a S corp then likely the IRS will still reject the petition and I have to amend the returns, right?
My advice would be to mail Form 2553 to the IRS service center with a detailed letter explaining your situation and that you made a mistake by requesting that the S corporation be canceled. Start contacting (by telephone) the service center after two weeks to find out if your S corporation election is in effect. If so, you can then file the 1120S.
I did this once and received a letter from the IRS stating that unless a commissioner approved it could not be done. So, you're recommending doing it once more with a more detailed explanation of the mistake and requesting a private letter ruling or commissioner review PRIOR to doing the returns again?
Anything that you have found can be included as a viable reason (is my sending the 2nd fax saying I had made a mistake and to disregard the first and having it ignored a viable reason)?
Would it be better to request a private letter or commissioner review? And in the case of a private letter ruling, how much additional time could that add since I only have until September to file the final return (I already paid the taxes to the best estimate possible). Thanks.
Just a short note to thank you for the positive rating. I wish you the best of luck with the IRS.
If you have any questions in the future, please feel free to put "for bkb1956" in the subject line, and I will be happy to assist you. Recommendations to family and friends are also always appreciated.