Introduction

Section 1224, of the Taxpayer Relief Act of 1997, requires partnerships with more than 100 partners (Schedules K-1) to file their return on magnetic media (electronically as prescribed by the IRS Commissioner). This law became effective for partnership returns with taxable years ending on or after December 31, 2000.

Partnerships with 100 or less partners (Schedules K-1) may voluntarily file their return using the MeF Platform.

This Web site provides an overview of electronic filing and more detailed information for those partnerships that prepare and transmit their own income tax returns using MeF. Partnerships that rely upon third party tax professionals to prepare and transmit their tax returns should consult their tax professional.

What’s New for TY 2009

New Form Schedule B-1 (Form 1065)

• Use to provide information applicable to certain entities, individuals, and estates that own 50% or more of the partnership
• Must be filed by all partnerships that answer “Yes” to question 3a or question 3b on Schedule B of Form 1065

New Form Schedule D-1 (Form 1065)

• A continuation sheet for Schedule D used to report additional capital gains and losses transactions

Note: The MeF schema for the Schedule D (Form 1065) allows an unlimited number of entries for capital gain or loss transactions. It is not necessary to complete the Schedule D-1 (Form 1065) when electronically filing. For additional information, see Instructions for Schedule D (Form 1065).

Publicly Traded Partnerships (PTP) subject to 3.5% tax

Two new elements were added to the schemas for TY2009

• New checkbox called “ThreeAndOneHalfPctGrsIncomeTax” at the return level that must be checked if you are subject to the 3.5% tax
• New element on Page 1, Line 22 of Form 1065 called “ThreeAndOneHalfPercent” where the amount of the 3.5% tax should be reported

Note: If you are a filer subject to the 3.5% tax on your partnership return, please ensure that the two items above and the existing dependency, “PubliclyTradedPartnershipStmt", are completed when filing your return.

Information for Partnerships About How to Participate in Electronic Filing

Partnerships that prepare their own income tax return must be authorized by the IRS as a “Large Taxpayer” or use a tax professional who is an IRS authorized e-file provider. The following documents are being updated to reflect important information for partnerships that will electronically transmit their tax returns instead of using the services of a third party authorized e-file provider.

e-Services Registration Process (PDF)

e-file Application for Large Taxpayers (PDF)

e-filing Form 8886, "Reportable Transaction Disclosure Statement"
Taxpayers required to e-file must provide Form 8886 in XML as part of the electronic return. They also are required to send paper copies of initial year filings of Form 8886 to the IRS Office of Tax Shelter Analysis showing the same information provided with the electronically filed Form 8886.

Approved IRS e-file Providers for Businesses
This page includes information on firms that provide e-filing products and services for business taxpayers, including those that file Form 1065 using the MeF Platform.

Electronic Communication between IRS and Transmitters during the e-file process
IRS communicates with the transmitter during the transmission and processing of an electronic return to ensure quick, accurate and timely electronic tax filing.

How MeF Systems are Approved for Electronic Filing
This overview explains the testing that is performed on IRS systems before they process electronic returns.

How Tax Preparation Software is Approved for Electronic Filing
IRS has a process required for software vendors in creating tax preparation software approved for electronic filing.

Security During Transmission of MeF Returns Using the Internet
IRS has safeguards and processes in place to ensure tax return data is secure during the electronic filing process.

Treasury Regulations on Required Partnership e-file

• Regulations Requiring the Use of Magnetic Media for Partnerships (PDF)
  These Treasury regulations describe the requirement for certain partnerships (those with more than 100 partners) to file their returns electronically.
  
• Regulations Eliminating e-file Impediments ( TD9300) (PDF) - These Treasury regulations revise signature and document attachment requirements that were determined to be an impediment to electronic filing of business tax returns.