IRS Grants Additional Relief for Partnerships Affected by Change in Due Date

In Notice 2017-71 the IRS has granted additional relief to taxpayers impacted by the change in the due date for partnership and related returns changed by the Surface Transportation and Veterans Health Care Act.  Calendar year partnership returns for 2016 were due on March 15, 2017, while in prior years that return would have been due by April 15. 

In Notice 2017-47 the IRS granted relief from late filing penalties for partnerships that filed their return or extension by the original due date.  This notice extends that relief to other items, except interest on tax due, affected by the change in the due date made by Congress.  That would include, for instance, the funding of a contribution to an employee benefit plan by the due date of the return for which a deduction is claimed on the prior year return.

The IRS outlines the relief as follows:

The IRS will treat acts of any (a) partnership, (b) REMIC, or (c) entity that may properly file a Form 1065—such as a bank (with respect to the return of a common trust fund), or a religious or apostolic association or corporation—and in fact filed a Form 1065, as timely for the first taxable year that began after December 31, 2015, and ended before January 1, 2017, if the entity took the act by the date that would have been timely under section 6072 before amendment by the Surface Transportation Act (April 18, 2017, for calendar-year taxpayers, because April 15 was a Saturday and April 17 was a legal holiday in the District of Columbia). However, the entity will be liable for any interest due under section 6601 from the date prescribed for payment until the date the payment was actually made.

The notice also provides the following relief for taxpayers that have already suffered negative consequences from the late filing:

An entity that has already been assessed a penalty for failure to timely file a return that is deemed timely filed under this notice can expect to receive a letter within the next several months notifying it that the penalty has been abated. For other acts deemed timely under this notice, such as elections, an entity should file its returns consistent with the treatment of the acts as being performed timely as provided by this notice, and need not take further action to obtain relief unless contacted by the IRS. For reconsideration of a penalty covered by this notice that has not been abated by February 28, 2018, contact the number listed in the letter that notified you of the penalty or call (800) 829-0115 and state that you are entitled to relief under Notice 2017-71. Taxpayers who qualify for relief under this notice will not be treated as having received a first-time abatement under the IRS’s administrative penalty waiver program.