IRS Tax Tsunami Ready to Hit Multi-Member LLCs
Fred Witt, J.D., LL.M. (in taxation)
Multi-member LLCs are facing an IRS tax tsunami.
After the BBA 2015 IRS partnership tax audit changes -- effective in 2018 -- a multi-member LLC taxed as a partnership must have specific IRS tax language in its operating agreement.
If your operating agreement names a “tax matters partner,” it is obsolete.
II. Multi-Member LLCs Taxed as Partnerships Must Address New IRS Tax Rules Effective in 2018
Beginning in 2018, a tax partnership LLC’s operating agreement should answer the following questions:
- Who is authorized to sign its IRS Form 1065 (due on March 15); and
- Who will be designated as the “Partnership Representative” in that return?
How can a tax partnership LLC provide this detailed information on its tax return without specific written authorization set forth in the LLC’s operating agreement?
How can an LLC open a bank account without specific written authorization in the operating agreement?
III. Online Solution Available with Mouse-Click
If you own or advise an LLC taxed as a partnership, your problem is trying to draft new language that reflects these new IRS tax changes.
We have an easy, time-saving, solution.
Working with Professor Howard Abrams, we created an online form store --- www.taxllc.com --- that offers LLC operating agreement forms with the new language for sale and instant download as a Word document. Then, you can review and use all or “cut and paste” any portion you want.
There are six different forms available. The price of each form is based on your use -- $995 for up to five uses or $2,495 for unlimited use.
Four forms are LLC operating agreements -- two are long/complex operating agreements (in Arizona or Delaware) and two are “simple” 20-page operating agreements (in Arizona or Delaware).
If you want to keep an LLC’s existing operating agreement, we have a unique “tax only” exhibit that can be attached to an LLC’s existing agreement. One is “member-managed” and the other is “manager-managed.”
Please check out www.taxllc.com for more details.
With instant download of our forms, your problem can be solved in minutes! Trips to the bookstore are no longer necessary!
Disclaimer: This material is provided for general information only and is not legal, financial or tax advice. Please consult with your own legal or tax advisor before making any decisions concerning your business or financial matters.