Form 8832, officially titled “Entity Classification Election,” is an Internal Revenue Service (IRS) form used by eligible business entities to choose or change how they are classified for federal tax purposes. This classification determines how the entity is taxed - whether as a corporation, partnership, or disregarded entity (such as a sole proprietorship). Filing this form allows entities, especially Limited Liability Companies (LLCs), to control their tax treatment rather than accepting the default IRS classification. This election impacts the entity’s income tax filing requirements, tax liabilities, and the types of tax returns they must submit.
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Key Facts
- Purpose: To elect or change an entity’s federal tax classification.
- Eligibility: Domestic eligible entities including LLCs, partnerships, and certain trusts.
- Default Classification: Single-member LLCs default as disregarded entities; multi-member LLCs default as partnerships unless the form is filed.
- Effective Date: Can specify a date up to 75 days before or 12 months after filing.
- Filing Deadline: Must be filed within a specific timeframe for the election to take effect as desired.
- Limitations: Only one classification change every 60 months unless IRS grants permission.
- No Fee: Filing Form 8832 is free of charge.
1. Who should file Form 8832?
Businesses that want to select or change their federal tax classification, such as LLCs electing to be taxed as corporations or partnerships, should file this form.
2. What happens if I don’t file Form 8832?
If the form is not filed, the IRS applies a default classification based on the entity’s structure, which may not align with the business owner’s preferred tax treatment.
3. Can Form 8832 be used to elect S corporation status?
No. S corporation status elections are made through Form 2553, not Form 8832.
4. How often can an entity change its classification using Form 8832?
An entity can generally only change its tax classification once every 60 months, unless it receives IRS approval for an exception.
5. Is there a filing fee for Form 8832?
No, filing Form 8832 with the IRS does not require any payment.
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