« IRS Fails to Obtain Tax Accrual Workpapers - Work Product Privilege Applies | Main | Nardone Speaks to Ohio Society of CPAs - Due Diligence Requirements for a Tax Return Preparer »

October 26, 2008

Disregarded Entities - Must Pay Employment Taxes

The landscape as to how the Internal Revenue Service treats disregarded entities changes as of January 1, 2009.  A disregarded entity is generally a sole member of a limited liability company or a sole shareholder of a S corporation that makes a Qsub election.  Under either scenario, the tax attributes of the sole-member limited liability company or the sole-shareholder S corporation flow up to the sole member or sole shareholder.  Thus, the sole-member limited liability company's or sole-shareholder S corporation's tax filing requirements are disregarded, including no requirement to obtain an employer identification number or file tax returns.

Under final treasury regulations, however, disregarded entities will no longer be "disregarded" for employment tax purposes, effective January 1, 2009.  Under the final regulations, the disregarded entity is treated as a corporation for employment tax purposes.  The entity will continue to be disregarded for other federal tax purposes.  See Treas. Reg. sections 1.1361-4 and 301.7701-2(c)(2)iv).

Please view the site disclaimer regarding the advice on this blog.

TrackBack

TrackBack URL for this entry:
https://www.typepad.com/services/trackback/6a00e54f9b06568834010535ba003b970b

Listed below are links to weblogs that reference Disregarded Entities - Must Pay Employment Taxes :

Comments

The comments to this entry are closed.

« IRS Fails to Obtain Tax Accrual Workpapers - Work Product Privilege Applies | Main | Nardone Speaks to Ohio Society of CPAs - Due Diligence Requirements for a Tax Return Preparer »

October 26, 2008

Comments

Feed You can follow this conversation by subscribing to the comment feed for this post.

The comments to this entry are closed.

-->