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Monday, October 2, 2017

Partnership Tax Returns Requirements & Penalties

A partnership, including a Limited Liability Company treated as a partnership for federal income tax purposes, is required to file Form 1065 for EACH partnership tax year.


For tax years beginning after 2015, Form 1065 is due on or before the 15th day of the 3rd month following the close of the tax year (March 15th for a calendar year partnership)

Form 7004 is used to apply for an automatic 6 month filing extension and must be filed on or before the due date of the tax return.

Failure to File Penalties

A partnership that fails to timely file Form 1065 or files an incomplete return is liable for a penalty of $195 PER PARTNER, PER MONTH up to a maximum of 12 months, unless reasonable cause is shown.

Reasonable cause depends on the facts and circumstances of why the tax return was filed late and is the responsibility of the Partnership partners to prove to the IRS. Examples such as the death of a partner or a partner's family member, a natural disaster, a major illness or disability, a bona-fide financial hardship, destruction of business records, etc. may allow the IRS to forgive or recude lae filing penalties.

A Partnership must also furnish EACH PARTNER with a Schedule K-1 on or before the due date of Form 1065.

The Partnership may also be subject to penalties for failure to furnish Schedule K-1 to its partners.


This article was written by Donald M. Scherzi, CPA, CFP, LLC
Mike Lupo, SCORE Counselor
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