United States

IRS announces penalty relief for certain late filing partnerships

IRS addresses confusion from changed filing dates

TAX ALERT  | 

The IRS has granted penalty relief for partnerships that failed to meet the new March 15, 2017 deadline for partnership returns (or extensions) as long as they filed returns or extension requests in time to have met the old-law deadline of April 18, 2017, determined as if that April deadline were still applicable. See Notice 2017-47 and corresponding news release.

Prior to 2017, calendar year partnerships were required to file their returns, or request an extension, by the 15th day of April (or later if that date fell on a weekend or holiday). For 2017, that rule would have resulted in a deadline of April 18, 2017. As a result of legislation enacted in 2015, the due date for partnership returns (and extension requests) was moved to the 15th day of March. That change took effect for the first time for filings (or extension requests) in 2017. Understandably, this change caused a great deal of confusion for otherwise conscientious taxpayers. According to the IRS, many partnerships filed their returns or extension requests technically late under the new law, but in time to meet the old April deadline, had that still been applicable.

Accordingly, Notice 2017-47 provides penalty abatement for partnerships that either filed their returns with the IRS on or before the old April filing deadline (April 18, 2017), or filed a request for extension on or before that same deadline.

Qualifying taxpayers will be granted automatic relief for penalties for failure to timely file their required partnership returns. In instances where a partnership has already been assessed late filing penalties, the notice indicates that the IRS will be providing a letter notifying them of the abatement. In addition, the IRS has indicated that relief under Notice 2017-47 will not be considered a first-time abatement under the administrative penalty waiver program.

With the Sept. 15 final partnership filing deadline rapidly approaching, taxpayers that missed the official March deadline, thinking the old deadline was still applicable, may find this news comes as welcome relief. Taxpayers that have already been assessed late filing penalties that would be covered by the new abatement rules should keep watch for penalty abatement letters, which the IRS has indicated should be forthcoming. If no abatement letter has been issued by Feb. 28, 2018, affected taxpayers are advised to contact the IRS at the contact number indicated in their original penalty notice, or to call 800-829-1040, indicating that they are entitled to relief under Notice 2017-47.

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