The process for changing ownership of an LLC with the IRS can vary based on the extent and type of ownership change. Here are the steps to consider based on whether you’re undertaking a partial or full transfer:
Partial Transfer
- Decide the percentage of the LLC being transferred if not selling entirely.
Full Ownership Transfer
- Review company documents.
- Evaluate the business’s assets.
- Make a sales agreement with the buyer.
IRS Notification and Forms
When the change in ownership affects the tax status:
- File form 8832 with the IRS.
- For updates to the LLC’s EIN responsible party, file form 8832-B. Note: EINs cannot be transferred to new owners.
To close your IRS account:
- Send a letter explaining why you want to close your tax account.
Special Considerations
- An EIN belongs permanently to a business and is not reused or reassigned.
- Some ownership changes require updating beneficial ownership reports, triggered by events such as buyouts or changes in responsible parties.
If updating minor details:
- A full beneficial ownership report might not need to be completed again.
Changing Business Structure
To shift from a sole proprietorship to an LLC:
- Inform the IRS by completing form 8832 for the new tax classification.
- Include a copy of the tax return with form 8832.