Reasonable Cause for Late Filing of Partnership Income Tax ReturnsPosted on June 17 2010 by admin
I have previously blogged about the penalties the IRS will impose on late filing Partnership income tax returns. To refresh your memory, the late filing penalty for a 2009 Partnership return is $89 for each month the return is late multiplied by the total number of partners in the Partnership. The penalty jumps to $195 per in 2010. As always, no penalty will be imposed if the Partnership can show that the late filing was due to reasonable cause.
What exactly does the IRS think is reasonable cause to file a Partnership return late? IRS Rev. Proc. 84-35 shows an example of reasonable cause. The following qualifications must be met in order for the Partnership to show reasonable cause and abate the late filing penalty.
1. The Partnership must be a domestic partnership.
2. The Partnership must have ten or fewer partners, each of whom is an individual (other than a nonresident alien) or an estate of a deceased partner.
3. Each partner’s share of each partnership item is the same as his share of every other partnership item.
4. The partnership, or any of the partners, establishes, if so requested by IRS, that all partners have fully reported their shares of the income, deductions, and credits of the partnership on their timely filed income tax return.
Does this reasonable cause excuse work? My experience in using Rev. Proc. 84-35 has been successful when the partners and the partnership meet these specific qualifications. What if your situation does not fall under these qualifications? Well, let’s just hope you have a very good legitimate reason for not filing your partnership return on time.
Steven B Schwartz, CPA
There is nothing more complex than the world of taxes. We know this and yet we chose careers where we face these issues everyday. We get questions day in and day out about new tax laws, forms and news items and how they affect everyday people and businesses. Well, here at Henry & Horne, LLP we have set out to do what we do best; help everyday people understand what is going on in the world of state, local, federal, estate and international taxation. We will provide these weekly posts and we encourage you to give us feedback on those posts as well as letting us know what else you would like to know more about. Welcome to "Tax Insights." We hope you find this blog informative and worthy of your time.
Before posting a comment on a blog post please be aware that we do not give free tax advice to non-clients by email, comment response, or phone. Thank you!
- Temporary Regulations Provide Guidance on Form 5471
- New Like-Kind Exchange Reporting Required for California (IRC 1031)
- Survey Suggests Taxpayers are Overconfident in Their Tax Prep Skills
- Timing Rules for SEPs and SIMPLE-IRAs Part II
- Timing Rules for SEPs and SIMPLE-IRAs Part I
- Are You an Identity Theft Victim?
- Supreme Court Decides Severance Pay is Subject to FICA Tax
- Mamma Mia! Who Can Deduct That?
- IRS Releases New Requirements to Claim the Earned Income Tax Credit
- AMT Facts with Exemption Amounts Updated