IRS Form 1065-X (2018): Administrative Adjustment Request

What IRS Form 1065-X (2018) Is For

IRS Form 1065-X (2018) serves as the official document for partnerships, S corporations, and pass-through entities that must correct previously filed returns or request an Administrative Adjustment Request (AAR). The form ensures that partnership adjustments, partnership income, and tax liability are accurately reported for every partner. Partnerships use it to amend partnership returns, revise tax attributes, and correct computational or allocation errors.

The centralized partnership audit regime established through the Bipartisan Budget Act of 2015 governs how adjustments are processed at the partnership level. Each submission reflects fiscal responsibility and compliance with the Internal Revenue Code. Filing Form 1065-X correctly maintains equity among partners and supports accurate distribution of each partner’s tax share.

Partnerships reviewing amendment procedures for prior-year filings can refer to our Business Income Tax Forms, which outline the federal business forms used for income reporting, amended submissions, and compliance requirements that relate directly to IRS Form 1065-X (2018).

When You’d Use Form 1065-X

Partnerships file Form 1065-X when they discover errors or omissions in a previously filed tax return. The form allows an audited partnership to correct computational issues, modify income allocations, or adjust self-employment income that affects each partner’s liability. The process ensures consistent application of IRS rules when a partnership elects to amend returns before an audit.

The form is also used when a partnership makes audit adjustments during the adjustment year after identifying discrepancies in partnership-related items. Partnerships must file amended returns to correct any inconsistent treatment of income or deductions among partners. The same applies when reporting changes involving passthrough partners or a deceased partner’s share of income.

Filing Form 1065-X helps maintain compliance, accuracy, and proper reporting for all affected partners. Each amendment reflects the partnership’s accountability and record integrity.

Key Rules or Details for 2018

The 2018 tax year introduced major changes that affect how a partnership files an AAR or amended return. The Bipartisan Budget Act of 2015 replaced earlier procedures, creating the centralized partnership audit regime that governs how an audited partnership corrects a previously filed form. These rules apply to partnerships, pass-through partners, and grantor trusts filing adjustments that affect partnership income or self-employment income.

An AAR submitted for the 2018 adjustment year must meet all filing requirements and adhere to applicable deadlines. A partnership that receives a notice of administrative proceeding cannot file an AAR until the process concludes. Each partnership files according to its agreement, ensuring accurate allocation of each partner’s distributive share and correction of inconsistent treatment across partners.

These regulations strengthen compliance and ensure fairness across all partnership returns. Each adjustment upholds consistency and tax accuracy.

Step-by-Step (High Level)

Each partnership follows a structured process when preparing and filing Form 1065-X to maintain compliance with the Bipartisan Budget Act (BBA). This procedure promotes accuracy, transparency, and consistency with the tax equity and fiscal responsibility standards introduced through the Fiscal Responsibility Act. The following steps describe how partnerships process adjustments and report corrections during IRS audits.

1. The partnership should determine which audit regime applies based on the partnership agreement and tax filing year.
   
   
2. The partnership should review income, deductions, and credits for any necessary adjustments.
   
   
3. The partnership must calculate all imputed underpayment amounts and verify related figures.
   
   
4. The preparer should explain each change clearly and reference applicable tax treaties when required.
   
   
5. The partnership should submit the corrected return and confirm that any balance owed is paid.

This systematic process strengthens compliance and supports partnership-level accountability. Each filing maintains integrity, precision, and fairness among all partners.

Common Mistakes and How to Avoid Them

Partnerships frequently encounter filing errors when preparing Form 1065-X, which may affect processing accuracy. The table below outlines common mistakes and practical ways to avoid them. Each solution helps ensure compliance, accuracy, and effective communication with the IRS.

Implementing these preventive actions promotes accuracy, reduces rework, and preserves timely IRS compliance for every partnership.

What Happens After You File

Once a partnership files Form 1065-X, the IRS begins a review to verify the accuracy of all adjustments. The review may involve comparing data with previously submitted partnership information to confirm compliance. Partnerships must respond promptly to any correspondence to prevent delays in processing or further review.

During a BBA partnership audit, the IRS determines whether the partnership’s reported income and deductions are accurate. Any changes may affect each partner’s tax liability and overall distribution of income. Partnerships that submit their form by the extended due date reduce the risk of late assessments and additional interest charges.

The IRS may take several months to complete its evaluation, depending on the complexity of the adjustments. Each partnership should keep all filing documentation organized. Maintaining communication with the IRS ensures transparency and accuracy for all individual partners.

FAQs

What is an Administrative Adjustment Request (AAR), and who can file it?

An AAR partnership files Form 1065-X to correct items reported on a previously filed return. Eligible partnerships use this filing to report a proposed partnership adjustment for IRS review. The process ensures that each change follows the correct audit procedures outlined in the Bipartisan Budget Act.

How does a BBA partnership audit affect the reviewed year partners?

A BBA partnership audit examines the reviewed year to verify income, deductions, and credits. If the IRS identifies issues, it may issue a final partnership adjustment that alters each reviewed year partner’s tax liability. Partnerships may choose to push out the adjustments to affected partners instead of paying at the partnership level.

Who represents the partnership during an audit?

The Partnership Representative has sole authority to act for the partnership during all administrative proceedings. This role replaced the former Tax Matters Partner after the Budget Act of 2015 took effect. The representative communicates directly with the IRS to manage responses and ensure compliance with audit procedures.

What are the filing deadlines for Form 1065-X?

Partnerships must file within three years from the original filing or by the extended due date. Timely submission ensures that any approved changes are processed during the correct tax periods beginning in the reviewed year. Partnerships that meet deadlines avoid additional interest or payment delays.

How do tiered partnerships handle adjustments?

Tiered partnerships and pass-through partners follow large partnership rules outlined in the Internal Revenue Code section governing centralized audits. These entities may use a push-out election to distribute changes to individual partners. Each reporting year, the partner accounts for adjustments accurately on the applicable tax return.

Partnerships that need access to additional federal business forms, prior-year schedules, or amendment resources may review our Federal Fillable Tax Forms directory for a comprehensive collection of related federal filing materials.