Legislative mandate Section 1224 of the Taxpayer Relief Act of 1997 requires partnerships with more than 100 partners to file their return on magnetic media (electronically as prescribed by the IRS Commissioner) for taxable years ending after December 31, 2000. Excluded from the mandate Refer to Publication 4164 PDF for clarification and information on the exclusions. Penalty abatement request If a partnership has more than 100 partners and is required to file their return electronically and they fail to do so, a penalty of $100.00 for each schedule K-1 over 100 will be assessed on returns required to be filed between January 1, 2011 and December 31, 2015. For returns required to be filed after December 31, 2015, a penalty of $260 for each Schedule K-1 over 100 will be assessed. If the partnership feels they can establish reasonable cause due to hardship after the penalty is assessed, they may request abatement of the penalty in writing. If the partnership feels that reasonable cause should be considered in relation to their penalty assessment, they should not wait for the penalty to be assessed to request such an abatement. All written requests for abatement of the failure to electronically file penalty should include the following: A notation in large letters at the top of the request stating, “Form 1065 Failure to e-file Penalty Abatement Request.” A statement that establishes a reasonable cause due to such issues as hardship, reasons out of your control, economic reasons, etc. Name, federal tax identification number, mailing address of the partnership. Taxable year for which the penalty abatement is being requested A statement signed by the Tax Matters Partner (TMP), as defined in Section 6231 (a) (7) of the Code indicating: “Under penalties of perjury, I declare that the information contained in this abatement request is true, correct and complete to the best of my knowledge and belief. If the request is being submitted by the partnership’s tax advisor/preparer it must be accompanied by a valid power of attorney A waiver may be granted before the return is filed if hardship is shown and will be based upon all facts and circumstances. A partnership interested in requesting a waiver of the mandatory electronic filing requirement must file a written request in the manner prescribed in Guidance on waivers for partnerships unable to meet e-file requirements. Note: If a partnership meets the criteria to electronically file, they should not file returns on paper before contacting the e-Help Desk. It is not necessary that a penalty be assessed for a partnership to request an abatement. It is recommended the partnership proceed with a request for a waiver before penalties are assessed. Mail the request to: This address if using the United States Postal Service Internal Revenue Service Ogden Submission Processing Center e-help Desk, Stop 1057 Ogden, UT 84201 This address if using another vendor such as FedEx, UPS Internal Revenue Service 1973 Rulon White Blvd. Mail Stop 1057, Attn.: e-help Desk Ogden, UT 84404 Fax Number – 877-477-0575 (toll-free) The Service will approve or deny the penalty abatement request based on the facts and circumstances of each request. Within 30 days after receipt of the penalty abatement request, the Service will send a letter to the partnership either approving or denying the request for abatement. For additional information regarding penalty abatement see IRS Notice 746 PDF.
