On July 25, 2019, the announcement of Rev. Proc. 2019-32 provided welcomed relief for Form 1065 filers. Under Section 6031(b), partnerships under the centralized audit regime are prohibited from amending, after the return’s due date, K-1 information required to be provided to partners. For 2018 returns, the K-1s show for the first time Line 20 Other Information figures regarding Section 199A Qualified Business Income.
Predominantly since 199A is rather complicated, there remains ample opportunity for mistakes on the K-1s regarding QBI and other newly mandated TCJA requirements. As such, the IRS gave Taxpayers a break and specific relief from Section 6031(b) by allowing a partnership that timely files and timely issues K-1s to file a superseding return and K-1s before the extended due date. Such superseding filing will be treated as the original return. If a partnership has not elected out of the centralized audit regime, it can thus file superseding returns and K-1s for six months from the return due date. Therefore, if a calendar year partnership filed its 2018 return on time, it can file a superseding return by September 15th and this subsequent return will control.
Partnerships that timely filed to meet the initial deadline are being afforded the benefit of the regular extension. This relief is being provided only for tax years that ended prior to the issuance of the Rev. Proc. with extended due dates after July 25, 2019 – so 2018 calendar year returns and some fiscal filers. This guidance will have no effect on the ability of individual partners to amend their own returns. There is no corresponding relief afforded 1040 filers, and as such, a 1040X will be necessary for individual taxpayers who already filed and receive amended K-1s.
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Nick Spoltore is VP of Tax & Advisory Content for Surgent CPE. Mr. Spoltore is a graduate of the University of Notre Dame and of Delaware Law School. Before joining Surgent, he practiced tax and business law at the firm of Heaney, Kilcoyne in Pennsylvania and also in Delaware