Skip to Main Content
 

Partnership Filing Relief

April 13, 2020

On April 8, 2020, the IRS released Revenue Procedure 2020-23, which allows certain partnerships to file amended partnership returns and issue amended Schedules K-1 to their partners for taxable years beginning in 2018 and 2019, in order to claim tax benefits under the CARES Act and other legislation.

The Bipartisan Budget Act of 2015 rewrote the provisions governing partnership tax returns and audits.  The new rules apply to all partnerships, except for a limited category of partnerships eligible to elect out, and generally took effect with the taxable year 2018.  

Section 6031 of the Internal Revenue Code, which requires that partnerships file their Forms 1065 with the IRS and furnish Schedules K-1 to partners, also generally prohibits partnerships from voluntarily amending Schedules K-1, except “as otherwise provided by the Secretary [of Treasury or his delegate].”  Prior to the publication of this Revenue Procedure, the Secretary had provided no such exception. 

Partners in a partnership are generally required to file their federal income tax returns consistently with the information reported to them by the partnership.  As discussed in Caplin & Drysdale’s recent client alerts, the CARES Act provides retroactive relief for tax years beginning as early as 2018.  However, section 6031 would have prevented partnerships and their partners from amending their past tax returns.  Instead, they would have had to file an “Administrative Adjustment Request,” which would result in these benefits being reflected on the partners’ current tax returns, which in most cases would not be filed until 2021.

By allowing partnerships to file amended returns and furnish amended Schedules K-1 to take advantage of the provisions of the CARES Act (and make any other needed corrections), the Revenue Procedure allows partnerships and their partners to realize tax benefits in the same timeframe as other taxpayers.

Partnerships may take advantage of the Revenue Procedure only by filing their amended Forms 1065 and furnishing their amended Schedules K-1 for tax years beginning in 2018 or 2019 before September 30, 2020, and they must clearly indicate that they wish to take advantage of the Revenue Procedure when they do so.  Only partnerships that filed their original returns prior to the Revenue Procedure’s issuance are eligible.

If you have questions about the applicability of the CARES Act to your business or you need to understand the implications of filing an amended return, Caplin & Drysdale’s attorneys are standing by to assist.

________________________________________________

About Caplin & Drysdale
Celebrating our 55th Anniversary in 2019, Caplin & Drysdale continues to be a leading provider of legal services to corporations, individuals, and nonprofits throughout the United States and around the world. We are also privileged to serve as legal advisors to accounting firms, financial institutions, law firms, and other professional services organizations.

The firm's reputation over the years has earned us the trust and respect of clients, industry peers, and government agencies. Moreover, clients rely on our broad knowledge of the law and our keen insights into their business concerns and personal interests. Our lawyers' strong tactical and problem-solving skills -- combined with substantial experience handling a variety of complex, high stakes, matters in a boutique environment -- make us one the nation's most distinctive law firms.

With offices in New York City and Washington, D.C., Caplin & Drysdale's core practice areas include:
For more information, please visit us at www.caplindrysdale.com.
Washington, DC Office:
One Thomas Circle NW
Suite 1100
Washington, DC 20005
202.862.5000
New York, NY Office:
600 Lexington Avenue
21st Floor
New York, NY 10022
212.379.6000

___________________________

Disclaimer
This communication does not provide legal advice, nor does it create an attorney-client relationship with you or any other reader. If you require legal guidance in any specific situation, you should engage a qualified lawyer for that purpose. Prior results do not guarantee a similar outcome.

Attorney Advertising
It is possible that under the laws, rules, or regulations of certain jurisdictions, this may be construed as an advertisement or solicitation.
©2020 Caplin & Drysdale, Chartered
All Rights Reserved.