Partnerships Can Issue Schedules K-1 Electronically

The IRS released Rev. Proc. 2012-17, that contains manners partnerships contingency follow if they wish to supply Schedules K-1, Partner’s Share of Income, Deductions, Credits, etc., electronically. The superintendence is effective Feb 13, 2012.

Failure to allow a Schedule K-1 as compulsory in Rev. Proc. 2012-17 can be deemed a disaster to allow a Schedule K-1 to a recipient, that is theme to penalties underneath Sec. 6722 for disaster to allow scold payee statements. Paper and electronic Schedules K-1 are compulsory to be supposing to recipients by a due date of Form 1065, U.S. Return of Partnership Income, which, for calendar-year partnerships, is Apr 15 (April 17 for 2012).

Consent to accept an electronic Schedule K-1

A chairman compulsory to allow Schedules K-1 to partners (furnisher) can allow it in an electronic format supposing a target has affirmatively consented to accept it in an electronic format, that can be achieved by carrying a target agree electronically in a approach that demonstrates that a target can entrance a Schedule K-1 in a format in that it will be supplied, or by paper supposing that a agree is reliable electronically by a target in a approach that pretty demonstrates that he can entrance a ask in a electronic format in that it will be furnished.

The IRS has 3 examples of a methods for receiving consent. The initial instance involves a furnisher’s promulgation a target a minute saying that a target might agree to accept a Schedule K-1 electronically by accessing a website, downloading a agree form and emailing a agree form to a furnisher, supposing a website uses a same electronic format that will be used to allow a Schedule K-1. The second instance involves promulgation a agree form by secure email, again regulating a same electronic format that will be used to send a Schedule K-1. The third instance has a furnisher posting a notice on a website explaining how recipients can entrance a secure Web page and agree to accept a matter electronically in a same format as a agree documents.

Withdrawal of agree

The agree requirement will not be confident if a target withdraws a agree and a withdrawal takes outcome before a matter is furnished, though a furnisher is accessible to need that a withdrawal be effective possibly a day it is perceived or during a after date that a furnisher communicates to a target in a reasonable time after receiving a withdrawal. The furnisher can yield that a ask for a paper matter is treated as a withdrawal of consent.

Paper matter after withdrawal of consent

A furnisher contingency yield a paper Schedule K-1 if a target withdraws agree and a withdrawal is effective before a electronic form is sent. An nice Schedule K-1 is deliberate a new matter for functions of a agree requirement if a agree withdrawal occurs after a strange Schedule K-1 was furnished and before a nice form is furnished. A paper matter furnished after a due date is deliberate timely if it is furnished within 30 calendar days of a date a furnisher perceived a agree withdrawal.

Change in hardware or program

If a furnisher changes a hardware or program and a change creates a element risk that a target will not be means to entrance a Schedule K-1, a furnisher contingency forewarn a target before it changes a hardware or software. The furnisher contingency explain that a new agree is compulsory in a new electronic format to settle that a target is means to entrance a Schedule K-1 in that format.

Furnisher’s compulsory disclosures

Before or during a same time as a furnisher obtains a recipient’s consent, a furnisher contingency yield an electronic or paper avowal with a following information:

  • That a Schedule K-1 will be supposing on paper if a target does not agree to electronic delivery.
  • The generation of a consent—whether a agree will ask to destiny Schedules K-1 until a agree is cold or usually to a Schedule K-1 that a target is consenting to accept currently.
  • The procession to be used in a destiny to ask a paper matter and either a furnisher will yield such a ask as a withdrawal of consent.
  • The procedures for withdrawing agree contingency be contained in a disclosure, including a hit information, a date a withdrawal will be effective (date of receipt or later), a requirement that a furnisher contingency endorse a withdrawal and a date it takes outcome in essay electronically or on paper, and that a withdrawal of agree will not ask to a matter furnished electronically in a demeanour described in Rev. Proc. 2012-17 before a date on that a withdrawal of agree takes effect.
  • The conditions in that a furnisher will stop providing electronic statements (such as withdrawal from a partnership).
  • The procedures for updating recipient’s hit information and that a furnisher will forewarn recipients of any change in a furnisher’s hit information.
  • A outline of a hardware and program indispensable to access, imitation and keep a Schedule K-1, a date after that a report will not be accessible on a website, and a information that a target might need to insert copies to federal, state or internal income taxation returns.

    Notice that Schedule K-1 is available

    If a Schedule K-1 is posted on a website, a furnisher contingency forewarn a target by mail, email or in person. The notice contingency explain how to entrance and imitation a Schedule K-1 and contingency embody this matter in collateral letters: “IMPORTANT TAX RETURN DOCUMENT AVAILABLE,” that contingency be in a theme line if a notice is sent by email. If a notice is sent electronically and returned as undeliverable and a furnisher can't obtain a corrected address, a furnisher contingency yield a Schedule K-1 by mail or in chairman within 30 calendar days after a electronic notice is returned.

    A Schedule K-1 or an nice Schedule K-1 contingency be defended on a website until a after of 12 months after a finish of a partnership’s taxation year or 6 months after a form is issued.

    Amended Schedule K-1

    Any Schedule K-1 that was creatively furnished electronically and afterwards nice contingency be furnished electronically within 30 calendar days of a date that it was amended. A Schedule K-1 creatively furnished by a website and afterwards nice contingency be posted on a website, and a furnisher contingency forewarn a target about posting a nice Schedule K-1 within 30 calendar days of a posting. Amended Schedules K-1 or a notice of a amendment contingency be supposing by mail or in chairman if an electronic notice of a strange or nice Schedule K-1 was returned as undeliverable and a target has not supposing a new email address.

  • About Emil Estafanous, CPA
    Certified Public Accountant (CPA) Tax Professional committed in representing taxpayers and resolving their tax problems.

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