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On April 8, 2020, the IRS issued welcomed guidance in Revenue Procedure 2020-23, allowing “eligible partnerships” to file amended returns for taxable years beginning in 2018 and 2019. Without this guidance, eligible partnerships must utilize the Administrative Adjustment Requests (AARs) procedures. Generally, utilizing the AAR procedures would delay partners from receiving the CARES Act benefits until they file their current year return – which could be in 2021.
Partnerships can still utilize the AAR procedures if desired. The amended return allows partnerships to take into account not only benefits of the CARES Act, but also to correct any other issues with the originally filed return (or AAR).
How to Implement an Amended Return under New Guidance:
In order to utilize the Amended Return procedure of this revenue procedure, the following must be satisfied:
- Comply with Centralized Partnership Audit. The partnership must be subject to the centralized partnership audit procedures (Eligible BBA Partnership). This revenue procedure does not apply to a partnership that affirmatively elected out of the centralized partnership audit procedures. If utilizing this revenue procedure, the partnership is still subject to the centralized partnership audit procedures.
- Qualify for Correct Tax Year(s). Partnership’s taxable year to amend began in 2018 or 2019.
- File Amended Return prior to October 2020. The amended return filed and the corresponding Schedule K-1s issued no later than September 30, 2020.
- The amended return must clearly indicate at the top of the form “FILED PURSUANT TO REV. PROC. 2020-23” with a statement attached to each Schedule K-1 sent to its partners with the same notation.
- The amended return is eligible for electronic filing.
Amended filing replaces prior returns.
Filing an amended return under this revenue procedure will replace any prior returns (including AARs filed by the partnership) for the taxable year. If a partnership has previously filed an AAR for an eligible year, the partnership should use the items adjusted in the AAR rather than the use items from the originally filed return.
Written notification is required when currently under an exam.
If the partnership is under exam and wants to utilize this revenue procedure, the partnership must send written notification to the examining agent stating its desire to use this revenue procedure to amend an eligible return. Upon filing the amended return, the partnership must provide a copy to the examining agent.
Partnerships using GILTI regulations require amended Schedule K-1s and notices for each partner.
If a partnership applied the rules of the proposed GILTI regulations for its first taxable year ending before June 22, 2019, the partnership:
- may continue to apply such rules when using this revenue procedure to file an amended return.
- must provide each partner with amended Schedule K-1s consistent with the proposed regulations, and provide the appropriate notifications to its partners by September 30, 2020.
Any obligation by the partnership to provide the information required is unchanged. Similarly, if a partnership applies the final GILTI regulations, the amended Schedule K-1s issued must be consistent with the regulations.
If you need any assistance or would like to discuss your options, please contact a K·Coe tax advisor.