How to Update Your LLC Tax Status in Rhode Island
Q: On the Articles of Organization there is an error… It indicates that for federal income tax purposes we will be treated as a partnership. We are not a partnership. How can we correct this?
Thank you to a customer in Rhode Island for that great question! Unlike most states, Rhode Island requires LLC owners to provide their tax status when submitting articles of organization. If your tax status has changed, or your articles were filed with incorrect information, you can update this information the same way you’d update anything in your articles of organization: with an amendment. Here’s how the process works:
1. Make sure your tax status accurately reflects the structure of your LLC
Knowing the tax status of your LLC can be trickier than it may initially seem. “LLC” is not itself a tax status, which means LLCs can legally file taxes under any of the following categories:
- Partnership
- Corporation
- Disregarded entity
Your LLC would file as a corporation if you’ve filed for S-corp status with the IRS (Form 2553), or if you’ve elected to be treated as an “association taxable as a corporation” (Form 8832). But whether you choose to file as a “partnership” or a “disregarded entity” depends in large part on the structure of your LLC.
What is the default tax status for an LLC?
In most cases, an LLC will be taxed as “partnership” by default. However, if you are your company’s sole member, your default tax status will be “disregarded entity.” Whether you own a multi-member LLC or a single-member LLC, you have the option to file Form 8832 and elect to be taxed as a corporation.
If you have additional questions specific to your business structure and/or tax status, it’s a good idea to reach out to a business attorney or a CPA.
2. Submit Articles of Amendment
Anytime your business changes in a way that ends up contradicting the information in your Rhode Island Articles of Organization, you’ll need to update your articles. This usually means filing Rhode Island Articles of Amendment. Here’s what they’ll need to include:
- Rhode Island entity ID number (section #1)
- Name of LLC (section #2)
- New tax status (section #6)
- Effective date (section #10)
- Name address and signature of an authorized person (either a member or manager, or another authorized person as stipulated in your LLC operating agreement)
- Filing fee of $50
Note that you will not have to complete most sections of this document, unless you are ALSO updating additional information in your articles (such as: entity name or principal address). You will also include contact information for the person or entity filing the amendment: name (of person or entity), date, street address, email address, phone number. This information will not be part of the public record.
For more on the amendment process, see: How to File a Rhode Island LLC Amendment.
How do I submit Rhode Island Articles of Amendment?
You can submit your articles of amendment to the Rhode Island Department of State – Business Services Division online, by mail or in person.
Online: Business Services Online Filing System
By Mail or In Person:
Business Services Division
148 W. River Street, Ste. 1
Providence, RI 02904
3. Update your tax status with the IRS
If your tax status has changed due to a structural reorganization within your LLC, you will have to update the IRS (if you haven’t already). For example, if you add a new member to a single-member LLC, it will effectively become a multi-member LLC. This changes your tax status from “disregarded entity” to “partnership,” and you will need to make sure the IRS has the correct tax status on-file for your LLC.
In most cases, you can file Form 8832 to change your tax status (a process called Entity Classification Election)—though in some cases you may have to file a different form. For S-corp classification, for example, you’ll file Form 2553.
