Tag Archive for IRS Revenue Procedure 84-35

IRS Failure to File Penalty Abatement for Partnerships

IF your partnership failed to timely file its IRS Form 1065 and you get penalized by the IRS you seek relief from or abatement of this penalty under IRS Revenue Procedure 84-35 if your partnership meets the following criteria

1. A domestic partnership composed of 10 or fewer partners and coming within the exceptions outlined in section 6231(a)(1)(B) of the Code will be considered to have met the reasonable cause test and will not be subject to the penalty for the failure to file a complete or timely partnership return, provided that the partnership, or any of the partners, establishes, if so requested by the Internal Revenue Service, that all partners have fully reported their shares of the income, deductions, and credits of the partnership on their timely filed income tax returns.

2. Partnerships having a trust or corporation as a partner, tier partnerships, and partnerships where each partner’s interest in the capital and profits are not owned in the same proportion, or where all items of income, deductions, and credits are not allocated in proportion to the prorata interests, do not come within the exception provisions of section 6231(a)(1)(B) of the Code and, are subject to the penalty.

3. If a partnership of 10 or fewer partners happens to not be automatically excepted from the penalty imposed the partnership may show other reasonable cause for failure to file a complete or timely partnership return.

4. In determining whether a partner has fully reported the partner’s share of the income, deductions, and credits of the partnership, the nature and materiality of any error or omission will be considered. IF de minimis the penalty may not be asserted. If a substantially material error or omission is found it will be.

If you have 10 or fewer partners you appeal this penalty following your appeal rights taking particular care at drafting a letter asking for abatement under IRS Revenue Procedure 84-35.