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Forms 1065 or 1065-B - Penalty Relief

Forms 1065 or 1065-B - Penalty Relief
Ines Zemelman, EA
01-Oct-17

On Sep 1, 2017 - the IRS issued information on penalty relief for certain partnerships that failed to file timely tax returns by the new due date, changed in the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015

Buried deep in the long congressional code was a section on change in due dates for certain tax returns - underline added for emphasis - the Partnership date was moved from April 15 to March 15th.

SEC. 2006. TAX RETURN DUE DATES. (a) DUE DATES FOR RETURNS OF PARTNERSHIPS, S CORPORATIONS, AND C CORPORATIONS.— (1) PARTNERSHIPS AND S CORPORATIONS.— (A) IN GENERAL.—So much of subsection (b) of 6072 of the Internal Revenue Code of 1986 as precedes the second sentence thereof is amended to read as follows: ‘‘(b) RETURNS OF PARTNERSHIPS AND S CORPORATIONS.—Returns of partnerships under section 6031 and returns of S corporations under sections 6012 and 6037 made on the basis of the calendar year shall be filed on or before the 15th day of March following the close of the calendar year, and such returns made on the basis of a fiscal year shall be filed on or before the 15th day of the third month following the close of the fiscal year.’’.

As per usual, many people did not notice the changed dates, and the IRS has acknowledged this by allowing penalty abatement for returns & requests for extension of time to file for returns that would have been filed on time (by April 17 in 2017). any partnerships filed their returns or their extension requests for tax year 2016 by the April deadline, and if not for the Surface Transportation Act, these returns and requests for extension of time to file would have been on time.

There are two primary requirements to apply for penalty abatement:

1. The partnership  must have filed the returns with the IRS by the old due dates that would have been timely prior to the 2015 act
2. If return was not filed, but an extension form 7004 was filed by the date that would have been timely prior to the 2015 act.

Great news - how do I apply for this penalty relief?

This relief will be granted automatically for penalties for failure to timely file Forms 1065, 1065-B, 8804, 8805, and any other returns, for which the due date is tied to the due date of Form 1065. Partnerships and REMICs that qualify for relief and have already been assessed penalties can expect to receive a letter within the next several months notifying them that the penalties have been abated.

Important to note - the IRS will not treat this penalty abatement request as a ‘first time abatement’ - allowing late taxpayers to save that ‘silver bullet’ for another time.

Ines Zemelman, EA
Ines Zemelman, EA
founder of Taxes for Expats