Instructions for LLC revoking S-Corp election
Disclaimer: This article explains how to revoke an S-Corporation election for an LLC. It doesn’t explain specific tax consequences that may be unique to your situation. In addition, this article doesn’t explain what tax forms must be filed before and after your LLC revokes its S-Corporation status with the IRS. Please speak with your accountant before, during, and after making any changes to your LLC’s tax classification.
There are many terms used to describe an LLC revoking its S-Corporation election with the IRS:
- LLC revoking its S-Corporation status
- LLC revoking an S election
- LLC revoking S-Corporation election
- LLC revoking S-Corp status
- LLC cancelling S-Corporation Election
- LLC terminating S-Corporation Election
- and more
(For the purposes of this article, they all mean the same thing.)
Meaning, if you see the term “status” or “election” throughout this article, please know that we are talking about the same thing.
Alright, enough disclaimers… onto the content:
If your LLC is taxed as an S-Corp and you’d like to cancel this election with the IRS, this is known as a “Voluntary Revocation of S-Corporation Status” (essentially “undoing” the filing of Form 2553).
The IRS doesn’t have a specific form to download on their website if your LLC wants to revoke its S-Corporation status.
Instead, you need to mail 3 items to the IRS, which together, “put the IRS on notice” that your LLC is revoking its S-Corporation status.
The items you need to revoke your LLC’s S-Corporation election with the IRS are:
- Letter of Revocation of S-Corporation Election
- Statement of Consent of LLC Members for S Election Revocation
- IRS Form 8832
What do these forms do?
Letter of Revocation of S-Corporation Election:
This tells the IRS to stop taxing your LLC like an S-Corporation. The IRS will then make a note in your LLC’s file that they should not look for an 1120S filing and they’ll place your LLC back into its default tax classification.
Statement of Consent of LLC Members for S Election Revocation:
This shows the IRS that all the Members of the LLC have agreed to make this change.
This tells the IRS how you want your LLC to be taxed after the S-Corp election is revoked:
- If you have a Single-Member LLC, you’ll tell the IRS to tax your LLC like a Sole Proprietorship/Disregarded Entity.
- If you have a Multi-Member LLC, you’ll tell the IRS to tax your LLC like a Partnership.
Want your LLC to be taxed as a C-Corporation instead? If you want your LLC to be taxed as a C-Corporation, you don’t need to file Form 8832. By not filing Form 8832 during the LLC’s revocation of its S-Corp election, it defaults to an LLC being taxed as a C-Corporation.
LLC’s Revocation of S-Corporation Letter
(We have a free template letter for you to download below.)
Your LLC’s Revocation of S-Corporation Letter must include:
- A statement that the LLC is revoking its election to be taxed as an S-Corporation under Section 1362(a) of the Internal Revenue Code.
- The name of your LLC, the mailing address of your LLC, and your LLC’s EIN (also known as a Federal Tax ID Number).
- A statement that the LLC doesn’t have shares of stock, but rather has percentages of ownership. And a list of the LLC owners and how much of the LLC they each individually own.
- Which taxable year you want the LLC’s revocation of the “S” Election to take effect.
- An attachment must be included along with your Revocation Letter showing that all LLC Members have agreed to the S Election Revocation. This attachment is called a “Statement of Consent of LLC Members for S Election Revocation“.
- (We have a free template letter for this too, which you can download below.)
The Statement of Consent of LLC Members must include the name of your LLC, its EIN, and a statement that the LLC Member(s) agree to revoke the LLC’s S-Corporation Election.
Along with the above, your Statement of Consent must also include:
- the LLC Members’ name,
- the LLC Members’ mailing address,
- the LLC Members’ Tax ID Number (such as SSN or ITIN),
- how much of the LLC each Member individually owns (expressed as a %),
- the date each LLC Member acquired their ownership in the LLC, and
- the date the LLC Member’s tax year ends (for most people they’ll list “12/31”)
Disclaimer: At the time this lesson was written, the forms below meet the IRS requirements for an LLC revoking its S-Corporation election. These forms should be used as sample templates only and should not replace advice given by your accountant, CPA, or tax attorney. If after speaking with your tax professional, you decide these forms will work for your LLC, they may be used – at your own discretion – and mailed to the IRS.
Certified Mail Return Receipt
This is not required, but if you’d like to be certain (and have proof) that your documents arrive properly at the IRS, we recommend sending by Certified Mail Return Receipt.
Letter of LLC Revoking S-Corporation Election
How to complete the LLC Revocation of S-Corporation Election
At the top of the form enter today’s date.
For the IRS’s mailing address, you will need to enter the address where you originally mailed Form 2553.
If you’re not sure which address you mailed it to, there are a few ways to figure this out:
- If you have a copy of your Form 2553, look at the address you listed at the top.
- If you don’t have your Form 2553, but have your Approval Letter (CP261), look at the address where the IRS mailed the approval.
- If you don’t have either of those items, you’ll need to call the IRS business line (800-829-4933) and ask them which address they have on file for your LLC. Their hours are Monday through Friday, 7am to 7pm local time (unless calling from Alaska or Hawaii; then use Pacific time).
Now that you have your LLC’s address (also known as your “Principal Business Address”), open the IRS’s Instructions for Form 2553. Then look for the section titled “Where To File”. You’ll then see different mailing addresses based on the address you used for your LLC (at the time you filed Form 2553).
Tip: Instead of tirelessly scrolling through the IRS’s instructions above looking for a specific section (“Where To File”), you can use the search functionality already built into your computer. If you’re on a Windows computer, hold ‘control’ and press ‘f’ on your keyboard, and then enter “where to file”. If you’re on a Mac, hold ‘command’ and press ‘f’ to search.
Enter the complete name of your LLC.
Enter your LLC’s EIN.
To Whom It May Concern:
List the name of your LLC, the state in which your LLC was formed, your LLC’s mailing address, and the date that you listed at the bottom of Form 2553.
In the next section, enter the LLC Member(s) name, how much of the LLC they own (expressed as a %), and their Tax ID Number, such as their SSN or ITIN.
Note: If you need room for more LLC Members, please download the form in Microsoft Word format above and copy/paste additional lines. It’s okay if your form extends onto the second page. If the LLC has only one Member, then you will just list that name at 100%.
Taxable year for which the revocation will be effective:
Make sure that you’ve spoken with your tax professional and decided what taxable year you want your revocation to take effect.
Then enter the first day of that taxable year, expressed as the “month, day, and year”.
For example, if it’s currently June 15th, 2023 and you want your revocation to take effect in the 2024 tax year, you’d enter “January 1st, 2024”. This is the first day of the taxable year for those running on the calendar year; January 1st to December 31st (which is the case for the majority of people).
Note: On the rare occasion that your LLC has a different fiscal year (something different than January to December 31st), please speak with your tax professional to determine the first day of your taxable year.
As per IRS regulations, your envelope needs to be postmarked by the “15th day of the 3rd month of the tax year for which it is requested to be effective.”
That’s a lot to digest, so let’s look at an example:
Let’s say you’ve decided that 2023 is the last year you want your LLC taxed as an S-Corporation. So the year in which the new election will become effective is 2024 (technically 1/1/2024). In this example, your envelope needs to be postmarked by 3/15/2024.
Source: IRS: 3.13.2 BMF Account Numbers. See “126.96.36.199.9 (01-01-2021) Request to Withdraw Classification Election”.
At the bottom of the letter, sign your name, then below, enter your name and title (likely “Member” or “Manager”). Then put your phone number at the bottom in case the IRS has any questions.
- Related article: LLC officer titles
Consent of LLC Members to Revoke
Free template letter download:
- Consent of LLC Members to Revoke S-Corporation Election (PDF)
- Consent of LLC Members to Revoke S-Corporation Election (Word)
Note: If you want to make any changes or edits to the document, download the Microsoft Word format of the Consent of LLC Members form.
How to complete the Consent of LLC Members to Revoke S-Corporation Election
Enter the complete name of your LLC.
Enter your LLC’s mailing address.
Enter your LLC’s EIN.
Enter your LLC’s name again, followed by the state in which your LLC was formed.
LLC Member(s) and Signature:
Enter the information for each of your LLC Members, including their name, mailing address, Tax Identification Number (SSN or ITIN), and how much of the LLC they own (expressed as a %).
For the “date acquired” section, enter the date when this person became a Member of the LLC. This will likely be the same date your LLC became effective (the date it was approved by the state). Please look at your LLC’s Articles of Organization, Certificate of Organization, or Certificate of Formation to find this date.
Then enter the date for each Member’s “tax year ends”. Most people run their taxes on the calendar year (January 1st to December 31st) so they will enter “12/31”. If you’re not sure when your tax year ends, please ask your accountant. Then have each Member sign their name and enter today’s date.
Note: If you don’t need the 2nd page, you can just discard it (don’t send it to the IRS). We included it in case your LLC has more than 4 Members.
IRS Form 8832
You can download IRS Form 8832 (“Entity Classification Election”) from the IRS’s website.
How to complete IRS Form 8832
Form 8832 must be filed in order to let the IRS know how they should tax your LLC (after the S-Corporation election is revoked).
As we’ve mentioned before, please speak with your accountant before filing Form 8832, as it’s easy to mess this form up and make mistakes. And that will not only have negative tax consequences for your LLC, but it will be a major headache and frustration to try and clean up.
At the top, enter your LLC’s name, its EIN, and its mailing address.
Under the “Check Off” section, check off any boxes that are applicable, or leave them all unchecked if none of them apply.
Part 1 – Election Information:
Under #1, “Type of Election”, you’re going to check off the second box to state that there was a change in the current classification.
Please review #2 (2a and 2b) carefully and make the proper selection based on whether or not you’ve recently made an entity election within the past 60 months.
For #3, check off “Yes” if your LLC has more than one Member (a Multi-Member LLC). Check off “No” if your LLC only has one Member (a Single-Member LLC).
If you checked off “Yes” in #3, then you’re going to skip #4 and go to #5. #5 will only need to be completed if your LLC is owned by another company.
If you checked off “No” in #3, you will need to enter the owner’s name and their Tax Identification Number, such as SSN or ITIN in #4. You’ll need to complete #5 only if it is applicable and your LLC is owned by another company.
Part 1 – Election Information (Continued):
In #6, you’re going to check off the tax status that your LLC is going to revert back to:
- Most Multi-member LLCs are going to revert back to partnership taxation. If that is the case for you, check off “B”.
- Most Single-member LLCs are going to revert back to sole proprietorship taxation. If that is the case for you, check off “C”.
#7 will only apply if your LLC was formed outside of the United States. If your LLC was formed inside the United States, you can write “N/A”.
In #8, you’re going to enter the first day of the taxable year (written as “month, day, and year”) in which you’d like your revocation to take effect. This should be the same as the date you entered in your Letter of Revocation of S-Corporation Election.
In #9 and #10, enter your first and last name, title, and phone number. The IRS will contact you if they have any questions. You will likely be using the title “Member” or “Manager”.
- Related article: Member-managed vs Manager-managed LLC
Consent Statement and Signature(s):
Have each Member of your LLC sign, date, and enter their title.
#11 will only apply if you are seeking late election relief. If you need to complete #11, please speak with your tax professional regarding what information to enter here.
Where to Mail S-Corporation Revocation & Supporting Documents
Remember, you’ll need to mail the above documents to the same IRS mailing center where you sent Form 2553. If you’d like, you can send them via Certified Mail Return Receipt.
To find that address, you’ll want to look at this page: IRS: Where to File Your Taxes (for Form 2553).
Note: All of the mailing addresses for the IRS do not include a street address. The IRS is so big that they have their own zip codes!
Approval time and what you get back
The “Letter of LLC Revoking S-Corporation Election” we provided above asks the IRS to send a Confirmation Letter to your LLC’s mailing address.
After the IRS revokes your LLC’s S-Corporation Election and reverts your LLC back to its default tax classification, they will mail a Confirmation Letter to your LLC’s mailing address (the address that you use in the letter).
Please allow 45-60 days before your Confirmation Letter arrives.
LLC Revoking S-Corp Status – FAQs
Does my LLC need to file a final Form 1120-S?
Not exactly. On Form 1120S, Section H, you – or your accountant – would select “S election termination“.
And on Schedule K-1, you’d select “Final K-1” at the top.
Does my LLC also need to revoke S-Corporation status with my state?
Keep in mind that the above information is only for how to revoke your LLC’s S-Corporation tax status with the IRS.
The IRS will not contact anyone else on your behalf to update them of the change.
Depending on the state where you formed your LLC, you likely need to revoke your S-Corp status with your state’s Department of Revenue, Department of Taxation, or equivalent tax office.
In addition to the above, depending where you file state taxes, your accountant will likely be changing the way you file your state income tax return.
You should not only ask them for assistance on how to properly revoke your LLC’s S-Corporation election at the state level, but also make sure they are filing your taxes correctly after your LLC’s revocation of S-Corporation status takes effect (since payroll and withholding amounts, among other things, will change).
What’s the 5-year waiting period for S-Corporation election again?
If you terminate your LLC being taxed as an S-Corporation you will not be able to get tax status as an S-Corporation again (on that same LLC) for 5 tax years.
In some cases, the IRS may grant an exception to this rule, however, you’ll need to consult with your tax professional for details.