This allows eligible partnerships to file a superseding Form 1065 and furnish new Schedules K-1 before the expiration of the extended deadline. 2019-32 treats eligible partnerships subject to the centralized partnership audit rules that timely filed Form 1065 by the original due date as if they also filed for a six-month extension. “The ability of the partners of such BBA partnerships to amend their own returns for the 2018 taxable year is not affected by the restrictions under section 6031(b) however, if the partner is a BBA partnership, the restrictions under section 6031(b) may apply.” However, the partners (other than upper-tier pass-through entity partners) can generally amend their returns to accurately report taxable income. In contrast, under current tax law a partnership that did not extend the due date, but timely filed its Form 1065 before the original due date, cannot file such a superseding return after the original due date. The partners of Partnership LxL can also amend their tax returns if they filed their returns prior to Partnership LxL issuing the revised Schedules K-1. Because Partnership LxL filed the revised return before the extended due date, the rules designate the revised tax return to be considered as the partnership’s originally filed Form 1065. It therefore filed a revised Form 1065 on July 28, 2019. Partnership LxL subsequently discovered it miscalculated tax depreciation. It then filed its 2018 Form 1065 (and the Schedules K-1) on June 3, 2019. The rules treat superseding Form 1065 as the partnership’s original return.Įxample: On March 12, 2019, Partnership LxL extended the original March due date of its 2018 Form 1065 to September of 2019. The IRS allows a partnership to extend this due date by six months (September 15 thfor calendar-year taxpayers).Ī partnership filing Form 1065 and providing Schedules K-1 to its partners prior to the filing deadline (including extensions) may file a superseding Form 1065 and furnish new Schedules K-1 prior to the deadline. The IRC designates the due date for filing Form 1065 and the associated Schedules K-1 as the 15 thday of the third month after the end of the partnership’s tax year (March 15 thfor calendar-year taxpayers). Further, partnerships subject to the centralized audit rules generally cannot amend these Schedules K-1 after the due date of the return. IRC §§ 6031 (a) and (b) requires a partnership to annually file Form 1065 and furnish corresponding Schedules K-1 to each partner. General Rules for Filing Partnership Tax Returns The centralized partnership audit regime officially went into effect as of the 2018 tax year. Under IRC §6222 (a), a partner’s tax return must report “partnership related items” (e.g., pass-through income, credits, etc.) in a manner consistent with how the partnership reported those items on its Form 1065. The partnership notifies each partner of the election in the manner indicated by the IRS.The partnership made the election on its timely filed Form 1065 disclosing the names and taxpayer identification numbers (TINs) of its partners.The partners consist only of individuals, C corporations, foreign entities treated as domestic C corporations, S corporations, and estates of deceased partners.For the tax year, the partnership does not file more than 100 Schedules K-1.The partnership explicitly elects to opt out of the regime.
1065 TAX EXTENSION CODE
The legislation codified this new regime under §§6221 through 6241 of the Internal Revenue Code (IRC).Ĭertain eligible partnerships with 100 or fewer partners can elect out of the BBA audit rules if they meet the following criteria under IRC §6221 (b): Unlike TERFA, the new audit regime determines, assesses, and collects tax at the partnership level instead of at the individual partner level. Section 1101(c) of the BBA created a new centralized partnership audit regime. 114-74, eliminating the unified partnership audit rules enacted by the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA). In 2015, Congress passed §1101(a) of the Bipartisan Budget Act (BBA), P.L. It will then explain the general rules regarding the filing of Form 1065 and the furnishing of the corresponding Schedules K-1 and wrap up by outlining the specific requirements that allow a partnership to avail itself of the relief granted by Rev. This article will begin with a brief discussion of the centralized regime. This relief is available to partnerships subject to the recently implemented centralized partnership audit regime and meeting certain other criteria. Return of Partnership Income, and furnish corresponding revised Schedules K-1, Partner’s Share of Income, Deductions, Credits, etc., to each partner. Proc.) 2019-32 granting an automatic six-month extension to eligible partnerships looking to file a superseding Form 1065, U.S. New IRS Revenue Procedure Grants Automatic Extension to File Superseding Form 1065 to Eligible Partnerships