CCA 201312042: state law determined who could sign for a disregarded LLC

Plain-English summary

Chief Counsel advised that state law determined who could sign for a limited liability company, such as its manager or member. State law commonly gives management authority to the members unless the operating agreement provides otherwise. If the husband was the LLC's sole owner and manager, no other person needed to sign for the LLC. The advice further stated that having the husband and wife sign for themselves eliminated the need for an agreement from the LLC in the Form 870-LT context because a pass-through could not bind indirect partners on partner-level items.

Ruling snapshot

• Question: Who could sign for a disregarded LLC in connection with a Form 870-LT?
• Outcome: Advice given, signing authority depended on state law and the operating agreement.
• Key authorities: IRC § 6224; applicable state law; Form 870-LT

Full text (IRS public release)

ID: CCA_2013020513424137 Number: 201312042
Release Date: 3/22/2013
Office: ----------
UILC: 6224.01-01

From: -------------------
Sent: Tuesday, February 05, 2013 1:43:07 PM
To: -------------------------
Cc: -------------------------------------------------------------------------- Subject: RE: Who can sign for a disregarded LLC

State law provides for who can sign for an LLC, i.e., a manager/member. Usually state law says the members have management authority unless the operating agreement provides otherwise. If the husband is the sole owner and manager of the LLC, there would be no reason to have anyone else sign for the LLC.

If you get the husband and wife to sign for themselves, you don't need any agreement from the LLC. In the case of a Form 870-LT this is the better course of action since a pass-thru cannot bind indirect partners as to partner-level items.