Converting an S corporation to a C corporation involves changing your business’s tax structure. You must notify the IRS. This is done through a formal letter. Businesses often make this change for various reasons. These include attracting investors or adapting to changing tax laws.
This article provides sample letters. These samples will guide you. You can use them to draft your own letter. We’ll share templates and examples. They will simplify the process.
Our goal is to make it easy. Writing to the IRS doesn’t have to be hard. Let’s get started.
Sample Letter To Irs For S Corp To C Corp
[Your Name/Company Name]
[Your Address]
[City, State, Zip Code]
[Date]
Internal Revenue Service
[IRS Address]
[City, State, Zip Code]
**Subject: Election to Terminate S Corporation Status – Conversion to C Corporation**
Dear Sir/Madam,
This letter serves as formal notification that [Your Company Name], currently operating as an S Corporation under Employer Identification Number (EIN) [Your EIN], has elected to terminate its S corporation status, effective [Date of Termination]. We are converting to a C Corporation.
This decision was authorized by a vote of the shareholders holding more than 50% of the issued and outstanding shares of stock in [Your Company Name].
We understand that this election will cause [Your Company Name] to be treated as a C Corporation for federal income tax purposes beginning on the effective date specified above.
We request confirmation of this election. Please direct any correspondence regarding this matter to [Your Name] at the address listed above or by email at [Your Email Address].
Thank you for your attention to this matter.
Sincerely,
[Your Name/Authorized Officer]
[Your Title]
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How to Write Letter To IRS For S Corp To C Corp
Subject Line: Clarity is Key
- Employ specificity. Instead of a generic “S Corp to C Corp Conversion,” opt for: “Election to Terminate S Corporation Status Under IRC Section 1362(d).”
- Include the Employer Identification Number (EIN) for swift identification.
- A potent example: “Election to Terminate S Corporation Status – EIN: XX-XXXXXXX”
Salutation: Formalities Matter
- Address the IRS with due respect. Avoid casual greetings.
- “To Whom It May Concern” remains a stalwart choice, but “Internal Revenue Service” works, too.
- If you know a specific recipient, leverage that knowledge for a personal touch.
Introduction: Setting the Stage
- Declare the intent unequivocally. State that the corporation is electing to terminate its S corporation status.
- Cite the relevant Internal Revenue Code section: § 1362(d). This showcases due diligence and understanding.
- Mention the corporation’s name, address, and EIN immediately.
- Example: “Pursuant to Internal Revenue Code Section 1362(d), [Corporation Name], located at [Address] and with EIN XX-XXXXXXX, hereby elects to terminate its status as an S corporation, effective [Date].”
Body Paragraph 1: Effective Date of Revocation
- Pinpoint the precise date the revocation should take effect. This is crucial for seamless transition.
- The revocation date can be prospective, commencing mid-year or at year-end.
- State clearly: “This election is to be effective as of [Date].”
- If the date is anything other than the first day of the tax year, be prepared to justify the timing.
Body Paragraph 2: Shareholder Consent
- Affirm that all shareholders consent to the revocation. This prevents future disputations.
- Include a statement such as: “All shareholders of [Corporation Name] consent to this termination of S corporation status.”
- Attach individual statements of consent from each shareholder, including their signatures, printed names, addresses, and number of shares owned. This substantiates the claim.
Body Paragraph 3: Rationale (Optional but Recommended)
- While not strictly mandated, providing a succinct rationale can expedite the process.
- Explain briefly why the conversion is occurring. Examples include strategic realignment, operational changes, or investor demands.
- Keep it concise. One or two sentences often suffice.
- Example: “This conversion is being undertaken to facilitate capital raising initiatives and pursue broader strategic objectives.”
Closing: Polished Conclusion
- Employ a professional closing. “Sincerely” or “Respectfully” are appropriate.
- Include the printed name and title of the person signing on behalf of the corporation. This lends legitimacy.
- Ensure the signature is legible.
- End with the date of the letter.
- Example:
Sincerely,
[Name]
[Title]
[Date]
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Frequently Asked Questions: S Corp to C Corp Conversion Letter to IRS
This section provides answers to common questions regarding the sample letter required when an S corporation elects to convert to a C corporation. Understanding the letter’s purpose and content is crucial for a smooth transition.
What is the purpose of submitting a letter to the IRS when converting from an S Corp to a C Corp?
The letter informs the IRS of the corporation’s election to terminate its S corporation status and operate as a C corporation.
What information should be included in the letter to the IRS?
The letter should include the corporation’s name, address, Employer Identification Number (EIN), the date the election is to take effect, and a statement indicating the corporation’s intent to revoke its S election.
Where should the letter to the IRS be sent?
The letter should be sent to the IRS service center where the corporation files its income tax returns.
Is there a specific form required by the IRS for this conversion?
No, the IRS does not require a specific form for revoking S corporation status. A written statement, such as the sample letter, is sufficient.
What is the deadline for submitting the letter to the IRS?
The letter must be filed on or before the 15th day of the third month of the tax year the revocation is to take effect. If you want it to take effect at the beginning of the next tax year, it must be filed any time before it.