What This Letter Means

Your limited liability company filed a corporate return, Form 1120 or Form 1120-S, and the IRS couldn't post it to your account. IRS records don't support the return type for that tax period. The usual reasons are:

  • The IRS has no record of a Form 8832 electing to treat the LLC as a corporation, or the election was denied.
  • The Form 8832 election took effect after the start of the tax period on the return.
  • For a Form 1120-S, the IRS has no record of a Form 2553 S corporation election for that period, or the election took effect later.

Without a valid election, an LLC is classified under the default rules. A multi-member LLC is a partnership. A single-member LLC is disregarded as separate from its owner. The letter asks you to fix the mismatch.

What to Do

  • If you made the election and it was accepted, send a copy of the IRS acceptance notice or letter showing an effective date that covers the return.
  • If the election was never filed or was late, send a corrected return. For a multi-member LLC that usually means Form 1065.
  • If you missed the S corporation election, the letter may tell you that you might qualify for late election relief under Revenue Procedure 2013-30. Review that with your tax adviser before you reply.

Answer by the date in the letter. Keep a copy of what you send and proof of mailing.

If You Don't Respond

The return doesn't sit and wait. If you don't reply, the IRS removes the return from processing. That creates filing and tax problems that are harder to unwind later than they are to fix now.

Why It Matters

Entity classification controls which return you file, how income is taxed, and who pays the tax. Get the election history straight before you file the next year's return so the same problem doesn't repeat.

If your LLC received Letter 3852C and the election history is unclear, call us at (813) 229-7100.