To help partnerships take advantage of retroactive provisions contained in the CARES Act, the IRS is allowing partnerships subject to the centralized partnership audit regime to amend returns for taxable years beginning in 2018 or 2019. (Rev. Proc. 2020-23)
The centralized partnership audit regime, which was enacted as part of the Bipartisan Budget Act of 2015, generally prohibits subject partnerships from filing amended returns beginning with the 2018 tax year.
The CARES Act provides retroactive tax relief for 2018 and 2019. Without the option to file amended returns, partnerships that already filed their returns for the affected years would generally be unable to take advantage of CARES Act relief except by filing administrative adjustment requests. This would result in the partners’ only being able to receive benefits from CARES Act relief once their partnership’s 2020 income tax return is filed, which could be in 2021.
The following limitations apply to these amended returns for partnerships subject to the centralized partnership audit regime:
- A partnership that files an amended return for the 2018 or 2019 taxable year pursuant to Rev. Proc. 2020-23 is still subject to the centralized partnership audit regime otherwise;
- Only those partnerships that filed a Form 1065 and furnished all required Schedule K-1s for the taxable years beginning in 2018 or 2019 prior to the issuance of Rev. Proc. 2020-23 (April 8, 2020) may file amended partnership returns for those years;
- Partnerships that choose to take advantage of the amended partnership return rules of Rev. Proc. 2020-23 must file amended returns for 2018 or 2019 and furnish all required Schedule K-1s before September 30, 2020; and
- Partnerships that choose to take advantage of the amended partnership return rules do so by filing Form 1065 (with the “Amended Return” box checked) and must write the following notation at the top of both the amended Form 1065 and each amended K-1: “FILED PURSUANT TO REV. PROC. 2020-23.”