The Internal Revenue Service (IRS) does not typically issue a document specifically called a "Letter of Good Standing" in the same way that state-level government agencies do for businesses. A "Letter of Good Standing," or more commonly a "Certificate of Good Standing," is generally issued by a Secretary of State's office or similar state authority to confirm that a business entity is properly registered, has filed all required reports, and is compliant with state laws.
While the IRS does not provide a "good standing" letter in this traditional sense, it provides various documents related to an individual's or entity's federal tax compliance status. It's crucial to understand the distinction between state-level business compliance and federal tax compliance.
What is a "Letter of Good Standing" (State-Issued)?
A Certificate of Good Standing (sometimes called a Certificate of Existence or Certificate of Status) is an official document issued by a state's Secretary of State or equivalent department. It verifies that a business entity (like a corporation or LLC) is legally registered and has maintained its compliance with the state's administrative requirements, such as filing annual reports and paying state fees.
Purpose of State-Issued Certificates:
- Proving legal existence to banks for loans or lines of credit.
- Registering to do business in another state (foreign qualification).
- Securing business licenses or permits.
- Entering into contracts or partnerships.
- Selling the business.
For instance, to obtain a Certificate of Good Standing in California, you would submit a request to the California Secretary of State's Sacramento office. This can typically be done in person (via drop-off) or by mail, and a fee, such as $5, is usually required.
What the IRS Provides (Federal Tax Compliance)
Since the IRS focuses on federal tax matters, the documents they provide confirm your tax filing and payment status, not your state-level business registration. Here are some IRS documents that might be sought when one is looking for an indication of federal tax compliance:
- Tax Transcripts: These are official records of your tax returns, wage and income statements, or account information. They can show if you have filed your returns and if there are any outstanding balances or issues with your tax accounts.
- How to Get Them: You can request various types of transcripts online (IRS.gov/transcripts), by mail (using Form 4506-T), by phone, or in person at an IRS Taxpayer Assistance Center.
- Tax-Exempt Status Letters: For organizations that have applied for and received federal tax-exempt status (e.g., under IRC Section 501(c)(3)), the IRS issues a determination letter confirming this status. If an organization loses its original letter, it can request a copy.
- How to Get a Copy: Tax-exempt organizations can contact the IRS to request a copy of their original determination letter if it has been lost or destroyed.
- Form 6166, Certification of U.S. Tax Residency: This is a letter printed on IRS letterhead that certifies an individual or entity is a resident of the United States for purposes of U.S. income tax treaties. It is often required by foreign tax authorities to claim tax treaty benefits.
- How to Request: You must submit Form 8802, Application for United States Residency Certification, to the IRS. There is a user fee associated with this application.
Key Differences: State vs. Federal "Good Standing"
The following table highlights the distinct nature of "good standing" documents from state authorities versus compliance documents from the IRS:
| Feature | State-Issued Certificate of Good Standing (e.g., from Secretary of State) | IRS-Issued Tax Documents (e.g., Transcripts, Form 6166) |
|---|---|---|
| Issuing Authority | State-level (e.g., Secretary of State, Department of Corporations) | Federal (Internal Revenue Service) |
| Purpose | Confirms compliance with state business registration and reporting laws | Confirms federal tax filing, payment, or residency status |
| What It Verifies | Legal existence, proper registration, active status, and compliance with state administrative filings | History of tax returns, payments, tax-exempt status, or U.S. tax residency |
| Typical Requirement For | Business loans, state licensing, foreign qualification, contracts | Loan applications (tax transcripts), foreign tax benefits (Form 6166), grants (tax-exempt letters) |
In summary, if you need a "Letter of Good Standing" for your business's legal status, you should contact the Secretary of State's office or the equivalent department in the state where your business is registered. If you need documentation regarding your federal tax compliance or status, you should look to the specific forms and services offered by the IRS.
