Converting S-Corp LLC to Partnership: Form 8832 or New EIN?

Someone on Reddit has an Illinois LLC that is taxed as an S-Corp with two owners. They are adding a new partner and want partnership taxation so they can take uneven distributions (S-Corps require distributions in proportion to ownership, so they currently use uneven W-2s). They asked: Can we just file Form 8832 to switch to partnership? Or is it better to apply for a new EIN as a partnership, open a new bank account, and file a final S-Corp return and a partnership return for 2025? You can use Form 8832 (together with revoking the S-Corp election) to change your LLC's federal tax classification from S-Corp to partnership. You generally do not need a new EIN or a new bank account just because the same LLC is changing from S-Corp to partnership.

Bottom line: You can use Form 8832 to elect partnership and must also revoke the S-Corp election in writing (with shareholder consent, by the deadline). The same LLC typically keeps its existing EIN when only tax classification changes. File a final Form 1120-S for the last year the LLC was an S-Corp and a partnership return (Form 1065) for the partnership period in 2025; a tax professional can set the effective dates and split. Opening a new bank account is a business choice, not an IRS requirement for the classification change.

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Question from Reddit

Question with S Corp moving to a Partnership. Form 8832 vs new EIN

Have a business that is an LLC in the state of Illinois that is currently taxed as an S Corp. 2 man and its not really set up for tax efficiencies see W2 comment below and adding a new partner.

We are looking to add another partner and take uneven distributions based on revenue generation that is not allowed currently with our set up as an S Corp (distributions have to be equal so we take massive uneven W2s).

Having us be a partnership with owners underneath it will help out in the future to add new partners and have other retire and change percentages with ease compared to S Corp structure.

Can we just file a form 8832 and that is it? We have no assets outside of rented office space and associates on computers....

Or Is the better way to do this, to apply for a new EIN with IRS as a partnership under our LLC and open a new bank account and have all future income go into new bank account, understanding we will have to file a final S Corp return in 2025 and a partnership return in 2025.

Source: Reddit

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Analysis

The user wants to transition their Illinois LLC from S-Corp taxation to partnership taxation so they can add a partner and take uneven distributions (and have more flexibility for future partners and percentages). They are asking: (1) Can they just file Form 8832 to make the switch? (2) Or is it better to get a new EIN as a partnership, open a new bank account, and file a final S-Corp return and a partnership return for 2025? The transition has implications for entity classification, EIN, and filing (final 1120-S vs partnership return).

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Answer

You can use Form 8832 to change your LLC's federal tax classification from S-Corp to partnership. You also need to revoke the S-Corp election (in writing, with shareholder consent, by the deadline). Once the S-Corp election is revoked and the LLC has more than one member, it is treated as a partnership by default for federal tax, so Form 8832 can be used to elect partnership classification explicitly (and is required in some cases depending on prior elections). Filing Form 8832 to elect partnership (and revoking S-Corp) is the standard way to convert; you generally do not need a new EIN or a new bank account just because you are changing from S-Corp to partnership for the same LLC.

Form 8832

• Form 8832 (Entity Classification Election) is used to elect how an eligible entity (e.g., your LLC) is classified for federal tax, e.g., as a partnership or corporation. To go from S-Corp to partnership, you (1) revoke the S-Corp election (letter to IRS, signed by shareholders as required, by the deadline for the year you want the change), and (2) elect partnership, which for a multi-member LLC is often the default once S-Corp is revoked, but you can file Form 8832 to elect partnership explicitly and lock in the classification. Follow the Form 8832 instructions for effective date and timing (e.g., cannot usually be effective before the 15th day of the third month after filing).
• So yes, filing Form 8832 (together with revoking S-Corp) is the right path; you do not need a new entity or a new EIN solely for the classification change.

EIN

• In most cases, the same LLC keeps its existing EIN when it only changes tax classification (S-Corp to partnership). The IRS generally assigns a new EIN when a new entity is created (e.g., new LLC) or in certain other situations (e.g., merger, change in entity type under state law). Merely revoking S-Corp and electing partnership for the same LLC does not usually require a new EIN. You can confirm with the IRS (or a tax professional) for your specific situation, e.g., if the ownership or legal structure is changing in a way that affects EIN rules.
• Opening a new bank account is a business choice, not an IRS requirement for the classification change. You can keep the existing account or open a new one; the important part is revoking S-Corp, electing partnership (Form 8832 if needed), and filing the correct returns.

Filing

• You will need to file a final Form 1120-S for the last year the LLC was an S-Corp (e.g., 2025 if the revocation is effective for 2025 or a short period in 2025). For the same year (or the period after the change), you may have partnership filing, e.g., Form 1065 for the partnership period. The exact split (final 1120-S for X months, first 1065 for Y months, or full-year treatment) depends on the effective date of the revocation and partnership election; a tax professional can map this out so you file final S-Corp return and partnership return correctly for 2025.
• So your understanding is right: final S-Corp return for the year of the change and a partnership return (Form 1065) for the partnership period; you do not need a new EIN or new bank account just to do that.

Summary

• Revoke S-Corp (in writing, by deadline) + elect partnership (Form 8832 if needed for your situation). That's the conversion.
• Keep your existing EIN unless the IRS or your advisor says otherwise (e.g., structural change).
• File final 1120-S and partnership return (1065) for 2025 as applicable; a tax pro can handle the dates and split.
• New bank account is optional; not required by the IRS for the classification change.
• Margen can help you model partnership income and distributions so you're ready after the switch.

Related: Entity Classification Election Mistake: LLC Treated as C-Corp · Can I Revoke S-Corp Election for My LLCs in 2026 and Go Back to Schedule C? · Converting from S-Corp Back to LLC · Do I File a 1065 and K-1 for a Multi-Member LLC?

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Applicable Sections

Federal / IRS

• Form 8832: Entity Classification Election; used to elect how an eligible entity (e.g., LLC) is classified for federal tax (e.g., partnership). (IRS Form 8832; Publication 3402: Tax Issues for Limited Liability Companies)
• Revocation of S-Corp: IRC § 1362(d)(1); Treas. Reg. § 1.1362-6; must be in writing, with shareholder consent, by the deadline (e.g., 15th day of 3rd month of tax year).
• EIN: Same entity generally keeps same EIN when only tax classification changes; new EIN when new entity or certain structural changes. (IRS EIN)
• Final Form 1120-S: Last year as S-Corp; Form 1065: Partnership return for partnership period.

State / Illinois

• Illinois may have its own S-Corp and partnership filing and notification requirements when you change classification. Consult the Illinois Department of Revenue or a state tax professional.

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Practical Notes

• Revoke S-Corp + elect partnership (Form 8832 as needed) = conversion; you do not need a new EIN or new bank account solely for this.
• File Form 8832 by the deadline (see instructions for effective date and timing).
• Confirm EIN with IRS or a tax pro if ownership or structure is changing in a way that might affect EIN rules.
• File final 1120-S for the last S-Corp year and Form 1065 for the partnership period in 2025; a tax professional can set the effective dates and split.
• Margen can help you model partnership income and uneven distributions after the switch.
• Illinois: Check state filing and notification for S-Corp revocation and partnership treatment.

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Limitations

This answer does not cover exact effective dates, short-period returns, or Illinois-specific rules. For timing, EIN confirmation, and state compliance, consult a tax professional. You can use Margen to model partnership tax and distributions before and after the change.