Under what circumstances will the IRS abate Late filing penalties for a Late Filed Partnership Tax Return?
Generally speaking, the IRS would abate the late filing penalty under the relief granted under “Rev Proc 84-35". The IRS has stated that "If this partnership meets the following requirements it qualifies for a penalty abatement." These are as follows
1. If the Partnership is a domestic partnership,
2. The Partnership has fewer than 10 partners.
3. The Partnership has partners that are all natural persons.
4. Each partner’s share of each partnership item is the same as his share of every other item.
5. All the partners timely filed their income tax returns.
6. All the partners fully reported their share of the income, deductions, and credits of the partnership of their timely filed income tax returns.
7. This is a newly filed Partnership tax return with the initial tax return filed late.
If the Partnership has previously filed all the tax returns on a timely basis and there were no late filing penalties assessed against this entity, this situation can also be helpful in abating this late filing penalty.
It is worth remembering the IRS can always make exceptions in certain cases, and they will allow 1 abatement only in granting any exceptions. Thus, if there are 11 partners and the tax return is late, the IRS may grant relief on a 1 time basis only!