IRS Notice Provides Penalty Relief to Certain Partnership Return Filing Taxpayers

by Monte L. Schatz

The IRS has issued Notice 2017-47 that provides penalty relief to partnerships that filed certain untimely returns or untimely requests for extension of time who filed those returns for the first taxable year that began after December 31, 2015.

Section 2006 of the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 (the Surface Transportation Act), Public Law 114–41, 129 Stat. 443 (2015), amended section 6072 of the Internal Revenue Code (the Code) and changed the date by which a partnership must file its annual return. The due date for filing the annual return of a partnership changed from the fifteenth day of the fourth month following the close of the taxable year (April 15 for calendar-year -2- taxpayers) to the fifteenth day of the third month following the close of the taxable year (March 15 for calendar-year taxpayers). The new due date applies to the returns of partnerships for taxable years beginning after December 31, 2015.

Many partnerships failed to timely file their various partnership returns (1065, 1065-B, 8804, 8805 or 7004 Extension requests for any of the other various partnership returns).  The assumption of these taxpayers was that the normal deadlines for their 2016 Partnership returns applied (namely April 18, 2017 for the actual returns and September 15, 2017 for those that filed the Form 7004 extension for any of these returns).    Normally in these circumstances the taxpayer is subject to late filing penalties; however, the new filing deadlines shortening the return filing period by one month resulted in many taxpayers filing late returns and the IRS has provided relief for those late filed returns.

The IRS in Notice 2017-47 has announced relief will be granted automatically for penalties for failure to timely file Forms 1065, 1065-B, 8804, 8805, and any other returns, such as Form 5471, for which the due date is tied to the due date of Form 1065 or Form 1065-B. Partnerships 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.  For reconsideration of a penalty covered by this notice that has not been abated by February 28, 2018, contact the number listed in the letter that notified you of the penalty or call (800) 829-1040 and state that you are entitled to relief under Notice 2017-47.

SOURCE: IRS Guidewire Issue Number N-2017-47

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Revised Tax Return Due Dates for Partnerships and C Corporations

President Obama signed the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 (“Act”) into law on July 31, 2015. The Act includes a series of revised tax return filing deadlines for partnerships and C corporations.

Returns for partnerships and entities taxed as a partnership filing a Form 1065 are due March 15 or the 15th day of the third month following the end of the organization’s fiscal year. The previous due date was April 15. Extensions are available for up to six months.

Returns for C corporations and entities taxed as a C corporation filing a Form 1120 are due April 15 or the 15th day of the fourth month following the end of the organization’s fiscal year. The previous due date was March 15. Returns for C corporations with a fiscal year ending on June 30 are due on September 15 until 2025. After 2025, the returns are due on October 15. Most C corporations can receive extensions of up to five months until 2026. After 2026, all C corporations can receive extensions for up to six months.

Tax returns for S corporations remain unchanged and are due on Mach 15 or the 15th day of the third month after the end of the organization’s fiscal year.

The new dates are effective for tax years beginning after December 31, 2015. These changes are not applicable to most filers until tax returns for 2016 are due in 2017, excluding short year filings.

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