IRS Allows Partnerships to Amend Form 1065

August 15, 2019

Partnerships Seeking to Amend 2018 Form 1065 are Eligible for Relief

Under the new IRS partnership audit rules in effect for tax years beginning on or after January 1, 2018, IRC Section 6031(b) states that information required to be furnished by a partnership to its partners may not be amended after the due date of the return.  This means that partnerships subject to the new partnership audit rules are prevented from amending Schedules K-1 after the due date of the partnership tax return. However, this rule does not apply to partnerships that have properly elected out of the new IRS audit rules on a timely filed partnership tax return.

On July 25, 2019, the IRS released Revenue Procedure 2019-32, which provides relief from the effect of Section 6031(b) and grants an extension of time to eligible partnerships to file a superseding Form 1065 and to furnish a corresponding Schedule K-1 to each of its partners. A superseding return is an amended return that is filed before the due date; it supersedes, or replaces, the original return that was filed. This allows partnerships to correct errors on Form 1065 and Schedule K-1 that would otherwise require a different procedure or be barred entirely.

Partnerships are only eligible for relief if they:

  • Timely filed Form 1065 and timely furnished Schedules K-1 prior to the application of the revenue procedure, and
  • File a superseding Form 1065 and furnish corresponding Schedules K-1 on or before the date that is six months after the non-extended deadline, are eligible for relief.

The practical effect of the revenue procedure is such that the IRS will treat timely filing of Form 1065 as a timely and appropriately filed request for a six-month extension of the deadline to file Form 1065.

To take advantage of the relief provided by Revenue Procedure 2019-32, the partnership should file a superseding Form 1065 and furnish corresponding Schedules K-1 in the same manner as the original return and Schedules K-1 and write on the top of the superseding Form 1065 “SUPERSEDING FORM 1065 PURSUANT TO REVENUE PROCEDURE 2019-32.” The superseding return replaces any prior return for the taxable year for purposes of determining the partnership’s treatment of partnership-related items.

For more information or questions you may have, reach out to Michael Elliot, or your trusted Cherry Bekaert professional.