File an Administrative Adjustment Request


To correct errors on partnership-related items, partnerships under the BBA must file an Administrative Adjustment Request (AAR) instead of an amended return. Partnerships cannot file an AAR only to change a partnership representative (PR) designation.

More on AAR filing and examinations: Updated Interim Guidance on Administrative Adjustment Requests (AAR) under the Bipartisan Budget Act of 2015 (BBA) Centralized Partnership Audit Regime PDF.

Who Files an AAR

Only the partnership representative can file and sign an AAR on behalf of the partnership. A partner can only file and sign an AAR on behalf of the partnership if they are also the partnership representative.

How to File an AAR

How the partnership representative files an AAR depends on how the partnership tax return was filed.

For electronic returns:

For paper returns:

Filing Deadline

The deadline to file an AAR is within 3 years of the later of:

  • The date the partnership return was filed or
  • The last day for filing the partnership return. (Extensions not included.)

Exception: A partnership may not file an AAR after a Notice of Administrative Proceeding has been issued.

Calculate and Report an Imputed Underpayment

A partnership that files an AAR must calculate whether the requested adjustments result in an imputed underpayment (IU). A partnership must also report the IU on the AAR.

If there is an IU, a partnership must either:

  • Make a payment on adjustments that result in an IU and push out adjustments that do not result in an IU to the reviewed-year partners  or
  • Push out all adjustments to the reviewed-year partners by making an AAR push out election.

If there is not an IU, a partnership must push out all adjustments for the reviewed year partners to take into account.

Pay an Imputed Underpayment

A partnership must pay an IU and any applicable interest or penalties at the same time the AAR is filed.

  • Pay by EFTPS or debit or credit card. (Direct Pay is not available for this payment.)
    • Select BBA AAR Imputed Underpayment from the list of payment types.
    • Apply payment to: Form 1065.
  • Pay by check or money order.
    • Make payable to “United States Treasury.”
    • Include the following information: the name of the partnership, Form 1065, the tax identification number of the partnership, the tax year, and “BBA AAR Imputed Underpayment.”

How to make an AAR Push Out Election

If the partnership elects AAR push out OR the AAR contains adjustments that do not result in an IU, it must include Form 8985 and Forms 8986 with the AAR submission. The Forms 8986 must also be furnished to the partners on the date the AAR is filed with the IRS.  Following are the relevant forms:

How to Report Modification of Imputed Underpayment in an AAR

A partnership that does not make an AAR push out election can request certain modifications to the IU amount. Complete and attach to the AAR Form 8980-Partnership Request for Modification of Imputed Underpayments Under IRC Section 6225(c) PDF and any related forms that apply. See Publication 5346, Instructions for Form 8980 PDF.

If a partnership makes an AAR push out election instead of paying an IU, any potential modifications that may have applied to the IU are disregarded.  

When a Partner Receives Form 8986 as a Result of an AAR

Non Pass-through Partners

Non pass-through partners who receive a Form 8986 as a result of an AAR will:

  • Use Form 8978, Partner’s Additional Reporting Year Tax to calculate and report their tax impact of adjustments pushed out to them.
  • File Form 8978 with their income tax return that includes the date the partnership furnished Forms 8986 to its direct partners (reporting year return).  
  • The non pass-through partner may pay in advance to stop the running of interest.
    • Pay by EFTPS, debit or credit card, or Direct Pay (Forms 1040 only).
      • Select Prepayment on BBA AAR/Exam Push Out as payment type.
      • Apply payment to: Forms 1040, 1120 (except 1120S) or 990T.

Pass-through Partners

Pass-through partners who receive Form 8986 as a result of an AAR will take one of the actions below.

Further push out all adjustments to its partners

  • Furnish a Form 8986 to each partner for the tax year of the pass-through partner that includes the end of the review year.
  • Submit to the IRS Form 8985 and Forms 8986 by fax to 888-981-6982.

Calculate and pay the IU amount based on the adjustments from the F8986 received as a result of an AAR

NOTE:  Whether or not an IU is paid, adjustments that do not result in an IU must be pushed out to partners.


26 CFR § 301.6227-1 - Administrative adjustment request by partnership (TD 9844)

26 CFR § 301.6227-2 - Determining and accounting for adjustments requested in an administrative adjustment request by the partnership (TD 9844)

26 CFR § 301.6227-3 - Adjustments requested in an administrative adjustment request taken into account by reviewed year partners (TD 9844)

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