What IRS Form 1065-X Is For
IRS Form 1065-X (2020) is the official document that partnerships use to correct errors on previously filed partnership tax returns. It allows partnerships to amend items such as income, deductions, credits, and each partner’s distributive share to ensure accurate reporting of tax liability. Partnerships also use it to update details connected to the partnership agreement or prior return data.
The form supports compliance within the centralized partnership audit regime created under the Bipartisan Budget Act. Most partnerships must file an Administrative Adjustment Request instead of a traditional amended return when correcting prior filings. Filing the correct version of Form 1065-X ensures compliance, supports fiscal responsibility, and prevents complications during future partnership audits.
When You’d Use IRS Form 1065-X
Partnerships file IRS Form 1065-X when they discover errors in a previously filed form that affected partnership income or deductions. The form allows partnerships to correct tax attributable amounts, amend partner-level allocations, or address reporting discrepancies that influence overall income tax liability. Filing an amended partnership return preserves compliance with the Tax Equity and Fiscal Responsibility Act and ensures that corrections appear accurately in the partnership record.
Common reasons for filing include identifying an imputed underpayment, redistributing partnership-related items, or making changes to the net income reported during taxable years beginning before audit adjustments. The process also applies when partnerships must file amended returns for former partners or tiered partnerships. Filing promptly promotes tax equity, fiscal responsibility, and proper alignment between partner-level obligations and partnership reporting requirements.
Key Rules or Details for 2020
Partnerships filing Form 1065-X for the 2020 tax year must follow the Bipartisan Budget Act’s centralized audit regime. The partnership representative or tax matters partner holds exclusive authority to act on behalf of the partnership during any adjustment or examination. Every partnership must include a valid taxpayer identification number to ensure correct processing and identification.
Entities such as regulated investment companies and real estate investment trusts must follow the audit procedures that apply to their filing category. Partnerships may need to pay tax at the entity level when additional tax arises from adjustments during the review. Adhering to the Tax Hikes Act and TEFRA partnership rules safeguards eligibility for tax benefits and ensures that such income remains correctly reported.
Step-by-Step (High Level)
Partnerships must follow an organized sequence when preparing and submitting Form 1065-X for the 2020 tax year. Each step must comply with the centralized partnership audit rules outlined in the Tax Technical Corrections Act. The partnership representative holds sole authority to oversee the process and ensure accuracy in every section of the filing.
Step 1: Identify whether the entity qualifies as a BBA partnership or an eligible opt-out partnership.
Step 2: Obtain the correct September 2018 version of Form 1065-X from IRS.gov.
Step 3: Record all corrections, supporting schedules, and explanations accurately.
Step 4: Review, sign, and mail the completed form to the appropriate IRS service center.
Following these steps ensures compliance and promotes accurate correction of partnership reporting errors.
Common Mistakes and How to Avoid Them
Partnerships commonly make filing errors when preparing Form 1065-X for the 2020 tax year. These mistakes can delay review and increase the likelihood of administrative proceedings during partnership audits. The table below outlines common filing mistakes and practical methods to prevent them at the partnership level.
- Use the September 2018 version that applies to eligible partnerships filing for 2020.
- Confirm that the authorized partnership representative signs the return before mailing it to the IRS.
- Specify whether the partnership pays additional tax at the entity level or elects to push out adjustments to partners.
Following these preventive measures ensures accuracy, timely processing, and compliance with federal partnership filing rules. Partnerships that require additional guidance on federal form instructions, amendment procedures, or supporting schedules may consult our IRS Form Help Center, which provides an organized collection of federal form summaries and related compliance resources.
What Happens After You File
Once a partnership files Form 1065-X, the IRS reviews the submission under the centralized partnership audit framework. The agency reviews each filing to confirm completeness, verify use of the correct form version, and ensure all required schedules are attached. Partnerships must ensure that reported adjustments comply with large partnership rules and prior law requirements.
During the review, the IRS evaluates whether each proposed partnership adjustment aligns with the applicable tax code and supporting documentation. Examiners confirm that all calculations meet the standards established under TEFRA partnership audit rules. The IRS may request additional information from the partnership representative if clarification or verification is necessary.
When the review concludes, the IRS issues a written acknowledgment confirming acceptance or further action. Maintaining precise records and proper form completion helps ensure a smoother review process and compliance with federal partnership regulations.
FAQs
What happens during a BBA partnership audit?
A BBA partnership audit follows the centralized partnership audit regime established by the Bipartisan Budget Act. During this process, the IRS reviews the partnership’s taxable income, the partner’s share, and supporting documentation. The IRS may issue a notice of final partnership adjustment if it determines that changes are necessary.
What is an Administrative Adjustment Request (AAR)?
An Administrative Adjustment Request (AAR) allows a partnership to correct errors without filing a full amended return. Partnerships subject to BBA partnership audits must use this process when revising prior filings. The Administrative Adjustment Request ensures that all partnership partners, including reviewed year partners, receive accurate allocations and tax information.
How are the reviewed year partners affected by an audit?
Reviewed-year partners are individuals or entities that held partnership interests during the tax year being examined. For each year reviewed, the partner must address any changes resulting from a final partnership adjustment. Adjustments can affect the partner’s tax liability, tax attributes, and income reporting on later returns.
Can foreign or tax-exempt partners be included in adjustments?
Yes, partnerships with a foreign entity, tax-exempt partner, or C corporation must apply adjustments according to their ownership percentage and applicable rules. The IRS may also review allocations for S corporations or individual partners. Each audited partnership must ensure consistent reporting across all partners throughout the audit process.
What happens after the IRS issues a final determination?
After the IRS issues a notice of final partnership adjustment, the partnership generally has the right to seek judicial review in tax court. Partnerships must file petitions within the prescribed timeframe to contest IRS findings. Completing this process demonstrates adherence to equity and fiscal responsibility standards.
Partnerships that require additional federal filing references, prior-year schedules, or related amendment resources may consult our Federal Fillable Tax Forms, which provide an organized collection of federal forms and supporting documents.
