United States

Select IRS late filed partnership forms may receive penalty relief

TAX ALERT  | 

The IRS issued guidance on Sept. 1, 2017, IRS Notice 2017-47, that provides penalty relief to partnerships that filed certain untimely returns or requests for extensions. RSM issued the tax alert on Sept. 5, 2017, discussing the IRS Notice and the relief it granted 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.

This tax alert auguments previously issued tax alert and specifies the forms that are impacted by the IRS Notice as well as the criteria used by the IRS to determine whether partnership qualifies for relief.

The deadline for partnerships to file a tax return or file for an extension changed with the passage of the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 (Surface Transportation Act), which amended IRC §6072. The law changed the filing due date from the 15th day of the 4th month following the close of a partnership’s taxable year to the 15th day of the 3rd month. The law took effect for taxable years beginning after Dec. 31, 2015.

Forms impacted by the notice include:

  • Form 1065 “U.S. Return of Partnership Income,”
  • Form 1065-B “U.S. Return of Income for Electing Large Partnerships,”
  • Form 8804, “Annual Return for Partnership Withholding Tax (Section 1446),”
  • Form 8805 “Foreign Partner’s Information Statement of Section 1446 Withholding Tax,”
  • Forms 5471, “Information Return of U.S. Persons With Respect to Certain Foreign Corporations” (filed by a partnership),
  • Form 7004, “Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns” (filed by a partnership)
  • Schedule K-1 (Form 1065), and
  • Other returns required to be filed by a partnership.

Failing to file any of these forms by their due date will subject a taxpayer to penalties, however IRS will waive late filing penalties for a partnership if the following conditions are satisfied:

  • A partnership that filed Form 1065, 1065-B, 8804, 8805, 5471 or other return required to be filed and furnished copies to partners by the date that would have been timely under section 6072 (April 18, 2017 for calendar year taxpayers) before amendment by the Surface Transportation Act, or
  • A partnership filed Form 7004 to request an extension of time to file by the date that would have been timely under section 6072 before amendment by the Surface Transportation Act and files the return with IRS and furnishes copies to partners by the 15th day of the 9th month (Sept. 15, 2017 for calendar year taxpayers) after close of the partnership’s taxable year.

Any client receiving a failure to file penalty, believes it meets the conditions listed above and has not received notice of automatic penalty abatement by Feb. 28, 2018, should contact the IRS at the number on its original penalty notice or 800-829-1040.

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