Some BBA Partnerships Get “Do-Over” for Already Filed 2018 Returns

| 8/1/2019
Recently released Revenue Procedure 2019-32 provides certain partnerships subject to the centralized partnership audit regime enacted by the Bipartisan Budget Act of 2015 (BBA) with relief from rules that prohibit partnerships from filing amended Schedule K-1s. This relief applies to partnerships that did not request an extension to file their 2018 returns and that timely filed and furnished their 2018 returns and Schedule K-1s by the unextended due date (March 15, 2019, for calendar year partnerships). Without this relief, the BBA rules could require partners receiving statements reflecting 2018 partnership corrections to take those corrections into account on their 2019 returns, which does not align with partners’ experience under prior law.

The relief the IRS is providing is generally the opportunity for a partnership to elect to treat a 2018 return that is timely filed by the unextended due date as a request for extension of time to file. As a result, these partnerships will have until the extended due date of the return (Sept. 16, 2019, for calendar year partnerships) to file a “superseding return.”

A superseding return is a subsequently filed original return, not an amended return. Accordingly, any reporting or elections on the subsequently filed original return are treated as if they are made on a timely filed original return. Eligible partnerships electing to use this relief must write “SUPERSEDING FORM 1065 PURSUANT TO REVENUE PROCEDURE 2019-32” on top of the subsequently filed Form 1065.

Only partnerships that did not elect out of the BBA on their already filed returns are eligible for relief. Partnerships with unextended due dates before July 25, 2019, are not eligible for relief. In addition, partnerships are not eligible for relief for tax years that end after July 25, 2019.

Why relief is needed

The 2018 tax year is the first year most partnerships are subject to the BBA. The 2018 tax year also is the first tax year affected by most of the provisions enacted as part of the Tax Cuts and Jobs Act of 2017 (TCJA). Taxpayers are still awaiting final guidance on many of the new TCJA provisions. This confluence of new rules has created significant uncertainty and complexity. As a result, many taxpayers requested filing extensions hoping to have a better understanding of these rules prior to the extended due date. Other taxpayers filed their 2018 returns on or before the unextended due date, planning to file amended returns if necessary.

A number of partnerships file their returns without extension on the unextended due date, in part to provide partners with the information they need to complete their returns. Because 2018 was the first year that the BBA was in effect, partnerships might not have been aware that they are required to file an administrative adjustment request (AAR) in order to correct the 2018 return. Unlike an amended return, AAR corrections pushed out to partners generally are taken into account for the tax year the statement is received, not the tax year being corrected. However, with this relief, corrections to already filed 2018 BBA partnership returns due to changes in TCJA guidance between proposed rules and final rules would be reflected on partners’ 2018 returns.


Revenue Procedure 2019-32 provides a unique opportunity for certain BBA partnerships that did not request an extension to revise their already filed 2018 returns and still have them treated as original returns. This relief could come in handy to file using more recent TCJA guidance without having to amend returns or if a partnership inadvertently missed, or changes its mind about, an election required to be made on an original timely filed return, such as an election out of the BBA under IRC Section 6221(b).

This relief is limited to BBA partnerships that timely filed returns that would have an extended due date after July 25, 2019, and with tax year-ends before that date. Thus, this relief does not apply to a short-year BBA partnership if the partnership’s extended due date would have been on or before July 25, 2019. Additionally, the relief does not apply to other types of taxpayers, such as corporations and individuals.

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Rochelle Hodes
Rochelle Hodes
Principal, Washington National Tax