RECOMMENDATION 01041-001
RECOMMENDATION TEXT:
Recommended Text: Place these addresses in the instructions to the form. Justification: Placing these mailing addresses before the form and instructions, may cause the taxpayer to inadvertently send the election to an incorrect address. Taxpayers have the right to clear and accurate instructions.
IRS Action: Recommended
RECOMMENDATION 01041-002
RECOMMENDATION TEXT:
Recommended Text: Business taxpayers should be able to change their mailing address for all tax filings. Justification: Requiring the taxpayer to change their address on numerous tax forms is inefficient and could cause important correspondence to be mailed to an incorrect address.
IRS Action: Recommended
RECOMMENDATION 01041-003
RECOMMENDATION TEXT:
Recommended Text: Change 2b to 2c and add new 2b. Within the 60-month period did more than 50% of the ownership interests in the entity, as of the date of the effective date of the election, owned by persons that did not own any interest in the entity on the effective date or the filing date of the entity’s prior election? Yes go to line 3 No go to 2c Justification: This is consistent with instructions for lines 2a and 2b except that the instructions indicate IRS may by private letter ruling permit the election within 60 months. Question the need for the private letter ruling. It would be an additional cost to the taxpayer and use IRS resources.
IRS Action: Recommended
RECOMMENDATION 01041-004
RECOMMENDATION TEXT:
Recommended Text: Develop means to allow taxpayers to file this form on the irs.gov website or via the Document Upload Tool (DUT). Justification: Reduces compliance burden for taxpayers. Mail service has become problematic in some communities and an electronic submission would make it easier for taxpayers to comply. In addition, taxpayers should have confidence that important filings are received.
IRS Action: Recommended
RECOMMENDATION 01041-005
RECOMMENDATION TEXT:
Recommended Text: Include hyperlinks for all references to other documents that are currently available electronically. Justification: Adding hyperlinks will assist the taxpayer in accessing the relevant information quickly.
IRS Action: Recommended
RECOMMENDATION 01041-006
RECOMMENDATION TEXT:
Recommended Text: Move the definition of eligible entity under definitions. Justification: Instructions will be more organized. If someone is looking for a definition of eligible entity, they would look under definitions. This change improves clarity and readability of the instructions.
IRS Action: Recommended
RECOMMENDATION 01041-007
RECOMMENDATION TEXT:
Current Text: However, if a qualified foreign entity (as defined in section 3.02 of Rev. Proc 2010-32) files a valid election to be classified as a partnership based on the reasonable assumption that it had two or more owners as of the effective date of the election, and the qualified entity is later determined to have a single owner, the IRS will deem the election to be an election to be classified as a disregarded entity provided: Recommended text: However, if a qualified foreign entity (see definitions) files a valid election to be classified as a partnership based on the reasonable assumption that it had two or more owners as of the effective date of the election, and the qualified entity is later determined to have a single owner, the IRS will deem the election to be an election to be classified as a disregarded entity provided: Justification: Adding the definition of qualified foreign entity eliminates the need to reference section 3.02 of Rev Proc 2010-32.
IRS Action: Recommended
RECOMMENDATION 01041-008
RECOMMENDATION TEXT:
Current Text: Also, if a qualified foreign entity (as defined in section 3.02 of Rev. Proc 2010-32) files a valid election to be classified as a disregarded entity based on the reasonable assumption that it had a single owner as of the effective date of the election, and the qualified entity is later determined to have two or more owners, the IRS will deem the election to be an election to be classified as a partnership provided: Recommended Text: Also, if the qualified foreign entity (see definitions) files a valid election to be classified as a disregarded entity based on the reasonable assumption that it had a single owner as of the effective date of the election, and the qualified entity is later determined to have two or more owners, the IRS will deem the election to be an election to be classified as a partnership provided: Justification: Adding the definition of qualified foreign entity eliminates the need to reference section 3.02 of Rev Proc 2010-32.
IRS Action: Recommended
RECOMMENDATION 01041-009
RECOMMENDATION TEXT:
Recommended Text: Include under definitions Qualified Foreign Entity. For purpose of this revenue procedure, a business entity is a “qualified entity” if the following conditions are satisfied: (1) The business entity is an eligible entity under § 301.7701–3(a); (2) The business entity is foreign under § 301.7701–5(a); (3) The classification of the business entity, either by default under § 301.7701– 3(b)(2)(i)(B) for a newly formed or newly relevant eligible entity, or by election under § 301.7701–3(c) for an existing relevant entity, would be or was an association taxable as a corporation; (4) As permitted under §301.7701–3(c), the business entity filed an otherwise valid Form 8832 electing to be treated for federal tax purposes, (a) As a partnership based on the reasonable assumption that it had two or more owners as of the effective date of the election; or (b) As a disregarded entity based on the reasonable assumption that it had a single owner as of the effective date of the election; (5) For federal tax purposes, either: (a) The business entity and its actual and purported owners (or owner) have treated the entity consistently with the election on the otherwise valid Form 8832 on all filed information and tax returns; or (b) No information or tax returns have been required to be filed since the effective date for the election made on the otherwise valid Form 8832; and (6) The period of limitations on assessments (as established under section 6501(a) of the Code) has not ended for any taxable year of the business entity or its actual and purported owners (or owner) affected by the election made on the otherwise valid Form 8832. Justification: Including the language in 3.02 of Rev Proc 2010-32 within the definitions eases the taxpayer burden of referring to other documents.
IRS Action: Recommended
RECOMMENDATION 01041-010
RECOMMENDATION TEXT:
Recommended Text: Include under definitions Qualified Foreign Entity. For purpose of this revenue procedure, a business entity is a “qualified entity” if the following conditions are satisfied: (1) The business entity is an eligible entity under § 301.7701–3(a); (2) The business entity is foreign under § 301.7701–5(a); (3) The classification of the business entity, either by default under § 301.7701– 3(b)(2)(i)(B) for a newly formed or newly relevant eligible entity, or by election under § 301.7701–3(c) for an existing relevant entity, would be or was an association taxable as a corporation; (4) As permitted under §301.7701–3(c), the business entity filed an otherwise valid Form 8832 electing to be treated for federal tax purposes, (a) As a partnership based on the reasonable assumption that it had two or more owners as of the effective date of the election; or (b) As a disregarded entity based on the reasonable assumption that it had a single owner as of the effective date of the election; (5) For federal tax purposes, either: (a) The business entity and its actual and purported owners (or owner) have treated the entity consistently with the election on the otherwise valid Form 8832 on all filed information and tax returns; or (b) No information or tax returns have been required to be filed since the effective date for the election made on the otherwise valid Form 8832; and (6) The period of limitations on assessments (as established under section 6501(a) of the Code) has not ended for any taxable year of the business entity or its actual and purported owners (or owner) affected by the election made on the otherwise valid Form 8832. Justification: Including the language in 3.02 of Rev Proc 2010-32 within the definitions eases the taxpayer burden of referring to other documents.
IRS Action: Recommended
RECOMMENDATION 01041-011
RECOMMENDATION TEXT:
Current Text: An association (as determined under Regulations section 301.7701-3) Recommended Text: An association (see definition above) Justification: Association has already been defined in the instructions. Would ease taxpayer burden by reference the definition of association already included.
IRS Action: Recommended
RECOMMENDATION 01041-012
RECOMMENDATION TEXT:
Recommended Text: Add TIP: See last page for a list of foreign entities with a default classification as a corporation. Justification: The taxpayer will still be alerted to the foreign entities classified as corporations for federal tax purposes.
IRS Action: Recommended
RECOMMENDATION 01041-013
RECOMMENDATION TEXT:
Current Text: Do not file this form for an eligible entity that is: Recommended Text: Add TIP: Do not file this form if the entity wants to be classified under the default rules. Justification: Although this statement appears on page 6 of the instructions in Part I Election Information, it would be more helpful to taxpayers if this information is included in the Who Must File section. This change reduces complexity and time spent by the taxpayer.
IRS Action: Recommended
RECOMMENDATION 01041-014
RECOMMENDATION TEXT:
Recommended text: Review the requirements for making an election to change the entity classification to determine whether it is regulatory requirement or legislative. If regulatory requirement, consider having the election made with the filing of the tax return. Justification: Allows the form to be filed electronically, most taxpayers think about tax information while they are filing their returns, saves the taxpayer and IRS time and reduces the burden.
IRS Action: Recommended
RECOMMENDATION 01041-015
RECOMMENDATION TEXT:
Recommended Text: If the election can’t be made with the return, eliminate the requirement to attach the Form 8832 to the tax return. Eliminate the need to attach Form 8832 to direct and indirect owners tax returns. Can eliminate note in right column of page 6 if the requirement is eliminated. Justification: The indirect or direct owners may not be aware of the requirement to attach the form and would be subject to penalties if it was not attached. Paperwork reduction would be a good reason to eliminate it.
IRS Action: Recommended
RECOMMENDATION 01041-016
RECOMMENDATION TEXT:
Recommended text: The online account should allow taxpayers to track the processing and receipt of Form 8832. In addition, acknowledgement of acceptance should also be placed on the taxpayer’s online account. Justification: Taxpayers should not bear the burden of contacting the Service if a timely acknowledgement has not been received. Instructions direct the taxpayer to contact the Service via telephone, certified mail or a private delivery service. Electronic submission, with posting to the taxpayer’s account should reduce the amount of time that the taxpayer and the Service must spend to resolve issues regarding timely filing and acceptance and give taxpayers confidence that this election has been received and acted upon. The taxpayer must have prompt notice of acceptance in order to prepare appropriate tax returns for the entity.
IRS Action: Recommended
RECOMMENDATION 01041-017
RECOMMENDATION TEXT:
Recommended Text: Update the timeline on when the IRS will notify since 60 days is too short a time frame for processing paper returns with IRS staff reductions. If they are going to leave at 60 days, IRS should send a letter acknowledging receipt of the form, but they need additional time to review and process. Justification: To keep the taxpayer aware of the progress of processing Form 8832. They are placing a burden on the taxpayer if the entity is not notified of acceptance or nonacceptance of its election within 60 days of the filing date.
IRS Action: Recommended
RECOMMENDATION 01041-018
RECOMMENDATION TEXT:
Current Text: Send any such letter by certified or registered mail via the U.S. Postal Service, or equivalent type of delivery by a designated private delivery service (see Notice 2004-83, 2004-52 I.R.B. 1030 (or its successor)). Recommended Text: Send any such letter by certified or registered mail to the same address as the original form was sent. Justification: Clarity and readability. Informs the taxpayer of the mailing address.
IRS Action: Recommended
RECOMMENDATION 01041-019
RECOMMENDATION TEXT:
Recommended text: Add: An EIN can be applied for on the IRS website using this link, Apply for an employer identification number (EIN) online | Internal Revenue Service Justification: Reduces complexity and compliance burden.