The IRS released Revenue Procedure 2020-23 to allow partnerships subject to the partnership audit regime enacted by the Bipartisan Budget Act of 2015 (BBA) to adjust previously filed partnership returns by filing amended Form 1065s, “U.S. Return of Partnership Income,” and Schedule K-1s, “Partner’s Share of Income, Deductions, Credits, Etc.,” rather than having to file an administrative adjustment request (AAR). This relief means that partners in BBA partnerships don’t have to wait until they file their 2020 tax returns to get 2018 and 2019 tax benefits under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), such as the qualified improvement property (QIP) fix. The revenue procedure provides broader relief to partnerships than the relief offered in 2019 related to guidance under the Tax Cuts and Jobs Act of 2017.
BBA Partnerships Can File Amended Returns for 2018 and 2019
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The ability to file amended partnership returns and amended Schedule K-1s is available only to BBA partnerships that filed Form 1065s and furnished Schedule K-1s for partnership taxable years beginning in 2018 or 2019, prior to the issuance of the revenue procedure. To file amended returns under the revenue procedure, a BBA partnership should file a Form 1065 (with the “Amended Return” box checked), furnish corresponding amended Schedule K-1s, write “FILED PURSUANT TO REV PROC 2020-23” at the top of the amended return, and attach a statement with each Schedule K-1 sent to its partners with the same notation. The amended returns (including the Schedule K-1s) may be electronically or paper filed.
While this guidance is focused on accelerating access to CARES Act tax relief, BBA partnerships can amend any item on the return, not just those items affected by claiming tax relief under the CARES Act. In addition, BBA partnerships under examination, as well as those that have already filed AARs for 2018 and 2019, are eligible to file amended Form 1065s and Schedule K-1s under the revenue procedure.
The revenue procedure is good news for BBA partnerships and their partners. Additional guidance on this revenue procedure, as well as other guidance on claiming 2018 and 2019 tax benefits under the CARES Act, should be forthcoming, and it is possible that accounting method relief might be included. Taxpayers should continue to work with their tax advisers to monitor upcoming guidance on the tax benefits under the CARES Act.
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