Notice 2019-20 provides penalty relief under sections 6722 (failure to furnish correct payee statements); 6698 (failure to file partnership return); section 6038(b) and (c) (failure to furnish information with respect to certain partnerships) of the Internal Revenue Code (Code); and any other section of the Code for filing or furnishing Schedules K-1 or other forms or statements, where a penalty is imposed solely as a result of failing to include information about partners\u2019 negative tax basis capital accounts for taxable years that began after December 31, 2017, but before January 1, 2019. <\/p>\n\n\n\n
BACKGROUND<\/p>\n\n\n\n
Item L of Schedule K-1 to Form 1065 and Item F of Schedule K-1 to Form 8865 require reporting a partner\u2019s capital account. Generally, a partnership may report partner capital to a partner using tax basis, Generally Accepted Accounting Principles, section 704(b) book, or some other method. Pursuant to updates, the 2018 Instructions for Form 1065 and Partner\u2019s Instructions for Schedule K-1 (Form 1065) to Item L now require a partnership that does not report tax basis capital accounts to its partners to report, on line 20 of Schedule K-1 (Form 1065) using code AH, the amount of such partner\u2019s tax basis capital both at the beginning of the year and at the end of the year if either amount is negative (negative tax basis capital account information). The Instructions for Form 8865, Schedule K-1, incorporate this requirement by reference to the Instructions for Form 1065. <\/p>\n\n\n\n
The Treasury Department and Internal Revenue Service (IRS) have become aware that certain persons and partnerships may be unable to comply timely with this new requirement.<\/p>\n\n\n\n
PENALTY RELIEF <\/p>\n\n\n\n
The IRS will waive penalties under section 6722 for failure to furnish a partner a Schedule K-1 (Form 1065) and under section 6698 for failure to file a Schedule K-1 (Form 1065) with a partnership return, under section 6038 for failure to furnish a Schedule K-1 (Form 8865), and under any other section of the Code for failure to file or furnish a Schedule K-1 or any other form or statement, for any penalty that arises solely as a result of failing to include negative tax basis capital account information if both the following conditions are met: <\/p>\n\n\n\n
a. <\/strong>the partnership\u2019s name and Employee Identification Number, if any, and Reference ID Number, if any; <\/p>
b.<\/strong> the partner\u2019s name, address, and taxpayer identification number; and <\/p>
c. <\/strong>the amount of the partner\u2019s tax basis capital account at the beginning and end of the tax year at issue. <\/p><\/blockquote><\/figure>\n\n\n\n
The schedule should be captioned \u201cFiled Under Notice 2019-20\u201d<\/strong> and accord with instructions and additional guidance posted by the IRS on IRS.gov. <\/p>\n\n\n\n
The due date for this supplemental schedule is determined without consideration of any extensions, automatic or otherwise, that may apply to the due date for the form itself. The schedule should be sent to the following address:<\/p>\n\n\n\n
Internal Revenue Service
Attn: Ogden PTE
MS 4700
1973 North Rulon White Blvd.
Ogden, UT 84404-7843 <\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"Notice 2019-20 provides penalty relief under sections 6722 (failure to furnish correct payee statements); 6698 (failure to file partnership return); section 6038(b) and (c) (failure to furnish information with respect to certain partnerships) of the Internal Revenue Code (Code); and any other section of the Code for filing or furnishing Schedules K-1 or other forms […]<\/p>\n","protected":false},"author":1,"featured_media":2571,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"apple_news_api_created_at":"2019-03-16T16:30:02Z","apple_news_api_id":"9f461733-271d-417c-88f2-beda26847be3","apple_news_api_modified_at":"2019-03-16T16:55:13Z","apple_news_api_revision":"AAAAAAAAAAAAAAAAAAAAAA==","apple_news_api_share_url":"https:\/\/apple.news\/An0YXMycdQXyI8r7aJoR74w","apple_news_cover_media_provider":"image","apple_news_coverimage":0,"apple_news_coverimage_caption":"","apple_news_cover_video_id":0,"apple_news_cover_video_url":"","apple_news_cover_embedwebvideo_url":"","apple_news_is_hidden":"","apple_news_is_paid":"","apple_news_is_preview":"","apple_news_is_sponsored":"","apple_news_maturity_rating":"","apple_news_metadata":"\"\"","apple_news_pullquote":"","apple_news_pullquote_position":"middle","apple_news_slug":"","apple_news_sections":["https:\/\/news-api.apple.com\/sections\/74d71b26-dfe2-3cf6-9b79-55911f8259f1"],"apple_news_suppress_video_url":false,"apple_news_use_image_component":false,"footnotes":""},"categories":[82],"tags":[],"class_list":["post-2952","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-tax"],"apple_news_notices":[],"_links":{"self":[{"href":"https:\/\/cookco.us\/news\/wp-json\/wp\/v2\/posts\/2952","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/cookco.us\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cookco.us\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cookco.us\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/cookco.us\/news\/wp-json\/wp\/v2\/comments?post=2952"}],"version-history":[{"count":0,"href":"https:\/\/cookco.us\/news\/wp-json\/wp\/v2\/posts\/2952\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/cookco.us\/news\/wp-json\/wp\/v2\/media\/2571"}],"wp:attachment":[{"href":"https:\/\/cookco.us\/news\/wp-json\/wp\/v2\/media?parent=2952"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cookco.us\/news\/wp-json\/wp\/v2\/categories?post=2952"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cookco.us\/news\/wp-json\/wp\/v2\/tags?post=2952"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}