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Partnerships Can Get More Time to File Superseding Tax Returns for Tax Year 2018 by Angie Adames, CPA

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Posted on August 27, 2019 by Angie Adames

Under a Revenue Procedure recently issued by the IRS, eligible partnerships that made errors on their timely filed 2018 federal tax returns in March of 2019, for which no extensions were filed, may have a small window of opportunity to file superseding Forms 1065 and Schedules K-1 to partners by Sept. 15, 2019. Taxpayers eligible for this relief are those that did not elect-out of the new centralized partnership audit regime, which, effective on Jan. 1, 2018, shifts the burden of an entity’s under-reported taxes to the partnership rather than its individual partners.

The centralized partnership audit regime, which was introduced by the Bipartisan Budget Act of 2015 (BBA), allows the IRS to go after a partnership’s deep pockets to correct for adjustments to an entity’s income, gains, losses, deductions and credits and remit taxes at the highest individual rate plus penalties and interest in effect during the adjustment year, rather than the audit year; the new regime became mandatory for the 2018 tax year.

Because this was the first year the BBA went into effect, the IRS will “treat the timely filing of Form 1065 by a BBA partnership as a timely and appropriately filed request for a six-month extension of the deadline to file the Form 1065.  Therefore, “partnerships that timely filed a Form 1065 and timely furnished all required Schedules K-1 to its partners (without regard to the extensions of time provided by this revenue procedure) may file a superseding Form 1065 and furnish corresponding Schedules K-1 before the expiration of the extended deadline without the obligation to file an amended federal tax return to correct errors.

About the Author: Angie Adames, CPA, is an associate director of Tax Services with Berkowitz Pollack Brant, where she provides tax and consulting services to real estate companies, manufacturers and closely held business. She can be reached at the firm’s Miami office at (305) 379-7000 or via email at info@bpbcpa.com.

Information contained in this article is subject to change based on further interpretation of tax laws and subsequent guidance issued by the Internal Revenue Service.