Small Business Taxes & ManagementTM--Copyright 2020, A/N Group, Inc.
Missing, incomplete, and incorrect Schedules K-1 will limit the IRS's ability to identify potential noncompliance, resulting in the loss of tax revenue and inequitable treatment of taxpayers, as well as potentially creating unnecessary work and increasing taxpayer burden. The IRS determined that improvements in the receipt and storage of Schedule K-1 data will increase information reliability and availability, which will assist in identifying potential tax noncompliance.
Accurate and complete Schedule K-1 data are not always received. If Schedules K-1 are not provided or contain inaccurate data, the Internal Revenue Code provides authority for the IRS to apply a penalty to the flow-through entity submitting the form.
The IRS encourages the software community to put checks in place to ensure:
The impacted Tax Forms include: Form 1041, U.S. Income Tax Return for Estates and Trusts, Form 1065, U.S. Return of Partnership Income, Form 1065-B, U.S. Return of Income for Electing Large Partnerships, Form 1120S, U.S. Income Tax Return for an S Corporation and Form 8865, Return of U.S. Persons With Respect to Certain Foreign Partnerships.
Copyright 2020 by A/N Group, Inc. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is distributed with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The information is not necessarily a complete summary of all materials on the subject. Copyright is not claimed on material from U.S. Government sources.--ISSN 1089-1536
--Last Update 03/03/20