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Introduction
Section 1224, of the Taxpayer Relief Act of 1997, requires partnerships with more than 100 partners (Schedules K-1) to file their return on magnetic media (electronically as prescribed by the IRS Commissioner). This law became effective for partnership returns with taxable years ending on or after December 31, 2000.
Partnerships with 100 or less partners (Schedules K-1) may voluntarily file their return using the MeF Platform.
This Web site provides an overview of electronic filing and more detailed information for those partnerships that prepare and transmit their own income tax returns using MeF. Partnerships that rely upon third party tax professionals to prepare and transmit their tax returns should consult their tax professional.
Information for Partnerships About How to Participate in Electronic Filing
Partnerships that prepare their own income tax return must be authorized by the IRS as a “Large Taxpayer” or use a tax professional who is an IRS authorized e-file provider. The following documents are being updated to reflect important information for partnerships that will electronically transmit their tax returns instead of using the services of a third party authorized e-file provider.
Directions for Partnerships Required to e-file
For partnerships "required" to e-file, the IRS has developed procedures which must be followed. Refer to the Tax Year 2007 Directions for Partnerships Required to e-file.
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Correct Name Controls Needed on e-filed Partnership Returns
The name control a partnership uses in their electronic tax return must match the IRS record of the partnership’s name control. This short set of FAQs explains why name controls are important and how taxpayers can verify their name control.
e-filing Form 8886, "Reportable Transaction Disclosure Statement"
Taxpayers required to e-file must provide Form 8886 in XML as part of the electronic return. They also are required to send paper copies of initial year filings of Form 8886 to the IRS Office of Tax Shelter Analysis showing the same information provided with the electronically filed Form 8886.
Approved IRS e-file Providers for Businesses
This page includes information on firms that provide e-filing products and services for business taxpayers, including those that file Form 1065 using the MeF Platform.
Guidance on Waivers for Partnerships Unable to Meet e-file Requirements
IRS publishes fact patterns describing situations in which waivers would generally be granted or not granted, under IRS Regulation section 301.6011-3, which provides waiver guidance for partnerships that cannot meet electronic filing requirements due to technology constraints; or where compliance with the requirements would result in undue financial burden.
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Electronic Communication between IRS and Transmitters during the e-file process
IRS communicates with the transmitter during the transmission and processing of an electronic return to ensure quick, accurate and timely electronic tax filing.
How MeF Systems are Approved for Electronic Filing
This overview explains the testing that is performed on IRS systems before they process electronic returns.
How Tax Preparation Software is Approved for Electronic Filing
IRS has a process required for software vendors in creating tax preparation software approved for electronic filing.
Security During Transmission of MeF Returns Using the Internet
IRS has safeguards and processes in place to ensure tax return data is secure during the electronic filing process.
Treasury Regulations on Required Partnership e-file
Known e-file Issues and Solutions (2007 tax year)
Schedule M-3 (Form 1065)
Schedule M-3 (Form 1065), Net Income (Loss) Reconciliation for Certain Partnerships Part I, Line 7b has an entry for net income or (loss) of other U.S. disregarded entities. The schema for TY2007v3.0 and 3.1 has an e-File type that restricts the amount to a non-negative entry; therefore, a loss cannot be reflected. The e-File type for Line 7b will be corrected on March 3, 2008, in schema version 3.2 to “USAmountType,” which will allow for either a positive or negative number.
Form 1065-B
Schema version 2007v3.0 has 2 statements erroneously defined as required for Form 1065-B: Other Foreign Disregarded Entity Schedule (OthForDisregEntSch) and Other U.S. Disregarded Entity Schedule (OthUSDisregEntSch). These statements have been redefined as optional for schema version 3.1.
Workaround:
When submitting a Form 1065-B, attach both statements to the return. No information is required in the statements. This workaround is needed to accept returns through January 20, 2008, for ATS and February 3, 2008, for Production. After these dates, Form 1065-B can be accepted without these statements.
Binary Attachments
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It has come to the attention of the Modernized e-File office that some transmitters/software developers/return originators are creating binary files incorrectly. In some instances, the IRS was unable to display the PDF document because of improper formatting. Effective immediately, please ensure that binary attachments are created according to the PDF standards in this correspondence. The internal identifier (first five bytes of the file) must be the standard PDF identifier, "%PDF-". If you have clients who use your software, please communicate to them the need to correctly create the binary files before transmitting. Beginning January 2008, returns with incorrectly formatted binary files (PDF documents) will be rejected.
Known e-file Issues and Solutions (2006 tax year)
Listing more than one foreign country in Schedule B
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Form 1065, Page 2, Schedule B, Question 9 asks whether or not the partnership had an interest in a financial account in a foreign country. The element is a boolean element. When the response is yes, the foreign country must be identified. The field for the foreign country code is an indicator on the Question 9 element. As such, only a single foreign country code can be identified at present.
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If more than one foreign country needs to be identified, please use the dependency labeled "foreign country account statement", present in the schema, to attach a statement.
Form 3115 Dependency attached to Part IV Line 27
- Section 481a Adjustment Schedule is missing from version 2.3 schema package. If this dependency is needed, please use the general dependency attached to the return to report this information.
Correcting the Partnership Name Control
- The partnership must write a letter to the IRS requesting a name control change. This should be done 30 day before filing a return. The letter needs to contain the partnership EIN, the current partnership name and name control and the new name control. The request must be signed by a partner of the business. If desired, the letter should also request confirmation that the name control change was received and made. The letter can either be faxed to (801) 620-7116 or mailed to:
Internal Revenue Service
1973 North Rulon White Blvd. M/S 6273
Ogden, UT 84404
Changing the Name of the Partnership
- 30 days prior to filing your return, the partnership must write a letter to the IRS requesting a name change. The letter needs to contain the partnership EIN, the current partnership name and the new partnership name. The request must be signed by a partner of the business. If desired, the letter should also request confirmation that the change was received and made. The letter can either be faxed to (801) 620-7116 or mailed to:
Internal Revenue Service
1973 North Rulon White Blvd. M/S 6273
Ogden, UT 84404
Contact IRS for More Information
If you do not find the electronic filing information you need in the material provided on this web site, IRS provides e-mail addresses where interested parties can submit questions concerning corporate e-file requirements.
- Partnership taxpayers (Forms 1065, 1065-B), software developers, and vendors may email questions about partnership e-file using MeF to: 1065 MeF.
Note: This email service is for Modernized e-file related questions only, not account or tax law questions.
While individual responses may not be possible due to the volume of questions submitted, IRS will post answers to frequently asked questions on this site.
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