Filing a Partnership return with zeros and amend later.

[Hamacher]

I have a client that doesn't have there information ready to complete an accurate partnership return but wants to file a return with all zeros and later amend the return.

Thoughts?

[Jiggers]

I wouldn't sign the return as the paid preparer.

You would be assisting the taxpayer in filing a fraudulent return.

[taxea]

Your client has until 9/15 or 9/17 to file the return if an extension is in place. If not, whether filed by the extension date or filed with all zeros he will be assessed failure to file on time penalty. I wouldn't sign the return either. What is his reasoning on filing a zero return and why isn't his paperwork available? He would be better off paying some money if he thinks he will owe. Either way late payment and late filing penalties will both be assessed as soon as the true return is filed.

[S T]

I have had a few partnership returns - Form 1065- where the information was incomplete, I filed based on the information that was in hand - and have amended later.

I don't believe, I would file all -zeros-

Inform the client, that you have to file based on the information provided- and do the best you can, if the information is reasonable.

Good Luck!

Sandy

[Bees Knees]

Don't file anything. Wait until information is available and then file a correct partnership return. All that is required is that the partnership provide each partner with accurate information by October 15th so that they can file correct individual returns by then. When IRS sends a bill for the late filing penatly, respond with the following letter:

"Please abate the penalty for late filing of our Partnership tax return. Revenue Procedure 84-35 says: “The penalty (for not filing Form 1065) will not be imposed if the partnership can show reasonable cause for failure to file a complete or timely return. Smaller partnerships (those with 10 or fewer partners) will not be subject to the penalty under this reasonable cause test so long as each partner fully reports his share of the income, deductions, and credits of the partnership ....” Since this partnership consists of less than 10 partners, and all partners fully reported their share of income, deductions, and credits of the partnership on their individual Form 1040, the penalty does not apply."

I have done this numerous times and IRS always abates the penalty when I mention Rev. Proc. 84-35.

[erchess]

ummmmm

Bees what do you need in order to complete an accurate return that you do not need in order to calculate the partners' shares of income deductions and credits?

What would you tell this client if he said that he could not or would not have the information needed to calculate the partners' shares of everything by the time you needed to have it in order to timely inform the shareholders?

Personally it sounds to me as though either (less likely) the partnership is waiting on info from a partner or a third party or (more likely) the partnership records are a mess and no one really knows what the income and expenses were and no one wants to make finding out quickly a priority. I put up with the latter from individuals including sole proprietors but I fire entities in a hurry because the penalties for them will be enough they will be mad at me anyway and because of the penalties I can face.

[Bees Knees]

erchess

The issue is the partnership return is due this Monday the 17th. The client can't get the info to the tax preparer by then to file an accurate return. The individual return isn't due until October 15th. That gives you one extra month to get on the client to get the information needed to prepare an accurate partnership return so that the individual returns are filed on time, thus giving you ammo to abate the partnership late filing penalty.

Rather than file a partnership right now by the due date with zeros on it, my comment was meant to say the partnership really has one extra month to get its act together before the penalty really applies – thus no need at this time to file a bogus return with zeros on it just because its due. After October 15th, if the guy still can't get his act together, I would do what you suggest – fire the client.

[JohnH]

Absolutey - we need to keep in mind that it is the CLIENT'S reponsibility to get the info to us in time. That would include getting it to us in time for us to actually complete the task. Otherwise the client will have to dealwith penalties. Make that clear up front and then let the client make the choice, including whether to incur penalties.

[JohnH]

Absolutey - we need to keep in mind that it is the CLIENT'S reponsibility to get the info to us in time. That would include getting it to us in time for us to actually complete the task. Otherwise the client will have to deal with penalties. Make that clear up front and then let the client make the choice, including whether to incur penalties. The only choice we really need to make is whether to keep doing their work.

[JohnH]

Absolutey - we need to keep in mind that it is the CLIENT'S reponsibility to get the info to us in time. That would include getting it to us in time for us to actually complete the task. Otherwise the client will have to dealwith penalties. Make that clear up front and then let the client make the choice, including whether to incur penalties. The only choice we really need to make is whether to keep doing their work.

[S T]

Don't file anything. Wait until information is available and then file a correct partnership return. All that is required is that the partnership provide each partner with accurate information by October 15th so that they can file correct individual returns by then. When IRS sends a bill for the late filing penatly, respond with the following letter:

"Please abate the penalty for late filing of our Partnership tax return. Revenue Procedure 84-35 says: “The penalty (for not filing Form 1065) will not be imposed if the partnership can show reasonable cause for failure to file a complete or timely return. Smaller partnerships (those with 10 or fewer partners) will not be subject to the penalty under this reasonable cause test so long as each partner fully reports his share of the income, deductions, and credits of the partnership ....” Since this partnership consists of less than 10 partners, and all partners fully reported their share of income, deductions, and credits of the partnership on their individual Form 1040, the penalty does not apply."

I have done this numerous times and IRS always abates the penalty when I mention Rev. Proc. 84-35.

Bees, I have two of these penalty notices on form 1065 - No extensions were filed, the form 1065 forms obviously were late however filed prior to 9/17/2012. Seems like IRS has an automated system for the penalty letters - as they are received within 2 weeks of filing. - Looks like a "witch hunt" to me. IRS can clearly see that the Partnership's have less than 10 - based on the number of K-1 forms attached.

Now my question, I can't quite respond to the penalty notice yet, as the Personal Form 1040 for 2011 has not yet been filed (which is on extension until 10/15/2012) so I really can't state that the Partner(s) - 2 Partners have filed their returns yet.

Should I call or write, stating the above - even though the Personal Returns have not been filed yet - They will or should be by 10/15/2012 ???

Thanks,

Sandy

[John of PA]

Put what you do know so far on the return, even if estimates, do not put all zeros.

[Bees Knees]

Now my question, I can't quite respond to the penalty notice yet, as the Personal Form 1040 for 2011 has not yet been filed (which is on extension until 10/15/2012) so I really can't state that the Partner(s) - 2 Partners have filed their returns yet.

Should I call or write, stating the above - even though the Personal Returns have not been filed yet - They will or should be by 10/15/2012 ??

Well, my opinion is the penalty for late filing can only be abated if the individual partners file their returns and report their share of income, deductions, credits, etc. So that can't be the case until the individual partners get their act together and file their returns.

I would use that as a way to pressure them to get you their stuff. You want your partnership penalty abated? Then I need to file your individual returns first, before I can respond to your partnership penalty notice.

[Nashville]

Excuses

I appreciate that this is a "whaddya do" situation with a client who can't get you the information.

I do have late stragglers - I'm sure we all do. They are the same people every year, and every year there is an excuse.

Indicate the classic ones you've heard:

1) I'm just not organized this year. [or last year, or year before that, etc...]
2) Little Johnny's on the soccer team.
3) My wife went in the hospital the 5th of September. so I haven't had time.
4) Last year's accountant messed me up. [watch out - he'll use that excuse next year too]

Rita B, if you're out there, I'll bet you can add some doozies...

[Jiggers]

And the classic response that I enjoyed from a now ex-client when the IRS demanded his delinquent return from 3 years prior (his wife did all the bookkeeping and compiling of information for his C, F, and 20 rentals):

"My wife had to play the organ at a wedding this past Saturday at our church."

The IRS blew a gasket on this one.