Can the IRS Abate or Not Assess a Penalty for Filing a Partnership Return After the Due Date?

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The Question:  Can the IRS Abate or Not Assess a Penalty for Filing a Partnership Return After the Due Date?  Answer Solution

 

 

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The Answer

YES - IN CIRCUMSTANCES THAT ARE SPECIFICALLY SET OUT BY "THE CODE" AND IF YOU FOLLOW AN ENUMERATED "REVENUE PROCEDURE".

Some of the writers telling you about this method bypass the most difficult requirement to meet in order to stop the penalty - there must be "reasonable cause".  The reasonable cause requirement along with all other requirements are covered in the "Do It Yourself" section.  Do not let his discourage you from making the request to remove, refund or not assess the penalty.  This is one of those tax tool the IRS is not required, or authorized by law to start without a claim from the taxpayer.

You Must Ask For This Relief

 

Solutions

Warning:  Solutions are dependent upon facts & circumstances, law and the objectives.  These elements vary from one time to another, from one circumstance to another and from person or entity to another.

You must meet the qualifications:

Is this a domestic partnership? 
Are there 10 or fewer partners? 
Are all partners a natural person (other than a nonresident alien) or an estate? 
Is each partner's share of each partnership item the same as his share of every other item (a husband and wife and their estate shall be treated as one partner)? 
Have all the partners fully reported their share of the income, deductions and credits of the partnership on their timely filed income tax returns?
There was reasonable cause for not filing timely at the due date and the return was filed on or before the date the reasonable cause was cured.

  The IRS may assess the penalty automatically, but you can ask for an abatement. See Rev. Proc. 84-35 for more details.

You must make the claim or protest the charging of the penalty.  The IRS has no responsibility to remove the penalty without your claim or protest being in proper form and filed with the correct office.

 

 

 

      

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Action Checklist - What To Do

OVERVIEW OF PROCEDURES

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STARTING

PRINT ALL THE REQUIRED DOCUMENTS

PRESENTATION STANDARDS

OBTAIN THE STANDARD WORKPAPER FORMS NEEDED

OBTAIN THE DOCUMENTS FOR THIS JOB

Forms - Checklists - Etc.

How to use the forms

FINAL OVERVIEW

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OVERVIEW OF PROCEDURES

Penalty for not filing partnership return . . . There's a penalty of $50 per partner, per month (but no more than 5 months) for failing to file a partnership return. Thus, if your partnership or LLC has two partners and is 6 months late in filing, you could be hit with a $500 penalty. But small partnerships may be able to avoid the penalty. You might be able to do so if you can answer the following questions affirmatively:

You must meet the qualifications:

Is this a domestic partnership? 
Are there 10 or fewer partners? 
Are all partners a natural person (other than a nonresident alien) or an estate? 
Is each partner's share of each partnership item the same as his share of every other item (a husband and wife and their estate shall be treated as one partner)? 
Have all the partners fully reported their share of the income, deductions and credits of the partnership on their timely filed income tax returns?
There was reasonable cause for not filing timely at the due date and the return was filed on or before the date the reasonable cause was cured.

  The IRS may assess the penalty automatically, but you can ask for an abatement. See Rev. Proc. 84-35 for more details.

OVERVIEW:  The objective is to send to the IRS a form (filing) which will accomplish either-

a protest of the charging of the penalty & request to remove the penalty, OR

request the IRS to forego assessment of the penalty.

If the 1065 has been, or will be filed late, this process must be followed to remove or prevent the penalty.  

The IRS is not obligated in this matter - which means you may not win your claim, however if you do not ask you will be assured of a loss of the argument.

The checklist will assist with gathering information, documents needed (models are shown) and methods the IRS requires.

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