In April, the IRS published 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 returns and Schedule K-1s 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.
Under the revenue procedure, BBA partnerships are permitted to make adjustments to previously filed 2018 and 2019 partnership returns by filing an amended Form 1065, “U.S. Return of Partnership Income,” and Schedule K-1s, “Partner’s Share of Income, Deductions, Credits, Etc.,” rather than following the complex AAR procedures. BBA partnerships have until before Sept. 30, 2020, to amend 2018 and 2019 partnership returns and Schedule K-1s that were filed prior to April 8, 2020, the date the revenue procedure was issued.
While the guidance is focused on accelerating access to CARES Act tax relief, BBA partnerships can amend any item on the return, not just those affected by claiming tax relief under the CARES Act.
This revenue procedure is good news for BBA partnerships and their partners. However, BBA partnerships that want to take advantage of this option must act before Sept. 30, 2020. Given the Sept. 15, 2020, extended due date for calendar-year partnership returns, BBA partnerships should work with their tax advisers to determine the best course of action in light of these tight deadlines.