What IRS Form 1065 (2020) Is For

Form 1065 is an information return used by domestic partnerships to report income, gains, losses, deductions, credits, and other information from their business operations to the IRS (IRS Instructions for Form 1065 (2020)). Partnerships don’t pay income tax directly but pass through profits or losses to partners, who must report their share on their individual tax returns via Schedule K-1.

When You'd Use Form 1065 for 2020 (Late or Amended Filing)

You would file Form 1065 for 2020 as a late return if you missed the original March 15, 2021 deadline and haven’t filed yet, often after receiving IRS notices demanding the return or assessing penalties.

You might also need to file an amended 2020 return to correct errors, such as misstatements of income or incorrect partner allocations. Late filings are common when partnerships discover unfiled years during compliance reviews or when partners need corrected K-1s for their personal returns.

The IRS may issue Notice CP-59 or similar correspondence indicating a balance due from unreported partnership income.

Key Rules Specific to 2020

• COVID-19 relief reporting: Partnerships had to report the employee retention credit (CARES Act) and payroll credits for sick/family leave (Families First Coronavirus Response Act).
  
  
• Tax basis capital accounts: New requirement to report partner capital accounts using the tax basis method.
  
  
• Gross receipts reporting: Expanded reporting for larger partnerships.
  
  
• Business interest limitations: Updated Section 163(j) rules applied for interest expense deductions.
  
  

Step-by-Step (High Level)

• Gather transcripts: Obtain partnership transcripts from IRS.gov or by calling 800-908-9946.
  
  
• Complete the 2020 form: Use the official 2020 Form 1065 and instructions, ensuring income, deductions, and partner data are accurate.
  
  
• Prepare K-1s: Furnish Schedule K-1s to each partner showing their distributive share.
  
  
• Attach schedules: Include Schedule B (Other Information), Schedule M-1 (book-tax reconciliation), and any others required.
  
  
• File return: Mail to the correct IRS processing center or e-file (mandatory for partnerships with 100+ partners).
  
  
• Keep records: Retain copies of the return, schedules, and supporting documents for at least three years.
  
  

Common Mistakes and How to Avoid Them

• Failing to issue K-1s: Missing or late K-1s trigger $280 penalties per partner.
  
  
• Incomplete reconciliation: Errors on Schedule M-1 often lead to IRS inquiries.
  
  
• Incorrect capital accounts: Must be tracked using the tax basis method.
  
  
• Wrong or missing EIN: Ensure the EIN matches IRS records to avoid delays.
  
  
• Ignoring state filing obligations: Most states require separate filings.
  
  
• Entity classification errors: Verify any Form 8832 elections are valid and current.
  
  

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What Happens After You File

The IRS typically processes partnership returns within:

• 6–8 weeks for e-filed returns
  
  
• 12–16 weeks for paper returns
  
  

If penalties apply, you may receive Notice CP-138 or similar correspondence. Payment options include online payments or installment agreements using Form 9465 (IRS.gov/payments).

The IRS may propose adjustments under BBA audit procedures, which give partnerships appeal rights through the Office of Appeals. Interest on unpaid penalties accrues from the original due date.

FAQs

What’s the late filing penalty for 2020 Form 1065?

The penalty is $205 per partner, per month, up to 12 months. For example, a 3-partner partnership filed 6 months late would owe $3,690.

Can I still get a refund by filing a late 2020 return?

Partnerships themselves don’t receive refunds, but partners may claim refunds on their individual returns if filed within 3 years of the original due date or 2 years from payment.

Should I file Form 1065-X or a regular amended return?

Most partnerships must use Form 1065-X (Administrative Adjustment Request) under BBA rules. Pre-BBA partnerships may still use amended return procedures.

Do I need to amend state returns too?

Yes. Most states require amended filings when federal returns are amended, but rules vary by state.

Can penalties or interest be waived?

Yes, penalties may be waived for reasonable cause (e.g., serious illness, natural disaster), but interest generally cannot be waived.

What if my partnership never obtained an EIN?

You must apply for one using Form SS-4 or online at IRS.gov before filing.

How long do I have to file the 2020 return?

There’s no absolute deadline to file late, but penalties accrue monthly and the IRS may issue a substitute return or pursue collection actions. Filing promptly minimizes penalties and risks.

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