Understanding how to correct errors on a previously filed partnership return can feel overwhelming, especially with the complex rules that govern partnership taxation. Form 1065-X serves as the primary tool for partnerships to fix mistakes and request adjustments, but knowing when and how to use it properly is crucial. This guide breaks down everything you need to know about Form 1065-X in plain English.

What Form 1065-X Is For

Form 1065-X, officially titled "Amended Return or Administrative Adjustment Request (AAR)," is the IRS form that partnerships use to correct mistakes on previously filed partnership tax returns. Specifically, it applies to corrections needed for Form 1065 (U.S. Return of Partnership Income), Form 1065-B (Electing Large Partnership Return), or Form 1066 (U.S. Real Estate Mortgage Investment Conduit Income Tax Return).

The form serves two distinct purposes depending on your partnership's status. First, it functions as a traditional amended return for partnerships not subject to special centralized audit procedures. These partnerships use Form 1065-X to simply correct errors like misreported income, miscalculated deductions, or overlooked credits. Second, the form operates as an Administrative Adjustment Request (AAR) for partnerships subject to the Bipartisan Budget Act (BBA) of 2015 or the older Tax Equity and Fiscal Responsibility Act (TEFRA) procedures. For these partnerships, the AAR process is significantly more complex because corrections flow through a centralized partnership-level system rather than individual partner amendments.

It's important to note that Form 1065-X is only for paper filing. If your partnership files electronically and needs to correct a return, you'll use Form 8082 (Notice of Inconsistent Treatment or AAR) submitted alongside an amended Form 1065 with the "Amended Return" box checked IRS Instructions for Form 1065-X.

When You’d Use Form 1065-X (Late/Amended)

Partnerships need Form 1065-X whenever they discover errors after filing their original return. Common situations include finding mathematical errors, discovering unreported income, realizing deductions were calculated incorrectly, correcting partner ownership percentages, or updating depreciation schedules. You might also need the form if the IRS sends you a notice pointing out discrepancies that need formal correction.

Timing Rules

The timing rules are critical. Generally, you must file Form 1065-X within three years of the later of two dates: either the date you actually filed the original partnership return, or the official due date for that return (not including extensions). For example, if your partnership's 2023 Form 1065 was due March 15, 2024, but you filed it on February 1, 2024, your three-year clock starts on March 15, 2024—giving you until March 15, 2027 to file any corrections.

Important Exception

However, there's an important exception: if you're a BBA partnership and the IRS has already mailed you a Notice of Administrative Proceeding (meaning they've started an audit), you cannot file an AAR. At that point, the audit process takes over IRS BBA Partnership AAR Guidance.

Key Rules or Details for 2024

Several important rules govern Form 1065-X usage in 2024. First, you must use the correct form revision. For partnership tax years beginning on or after January 1, 2023, use the August 2023 revision of Form 1065-X (revised December 2024 for instructions).

BBA vs. Non-BBA Partnerships

The BBA distinction is absolutely crucial. Most partnerships for tax years beginning after 2017 are automatically subject to BBA rules unless they properly elected out. BBA partnerships cannot file a traditional amended return—they must file an AAR instead. The difference matters because BBA partnerships face unique reporting requirements and potential partnership-level tax assessments called "imputed underpayments" (IU). Non-BBA partnerships simply correct their returns and issue amended Schedule K-1 forms to partners.

Filing Location and Signatures

When filing, you must submit Form 1065-X to the same IRS service center where you sent the original return. The form must be signed by the appropriate person: for BBA partnerships, only the partnership representative (PR) or their designated individual can sign the AAR. For non-BBA partnerships, any authorized partner may sign.

Mandatory Electronic Filing Threshold

Mandatory electronic filing applies if your partnership files 10 or more returns of any type during the year (including payroll, excise, or information returns). In that case, don't use Form 1065-X at all—file electronically using Form 8082 with an amended Form 1065 IRS About Form 1065-X.

Step-by-Step (High Level)

Step 1: Determine Your Partnership Type

Identify whether you're filing as a non-BBA partnership (amended return), a BBA partnership (AAR), a TEFRA partnership, or another entity type. This determines which boxes you'll check in Part I of the form and what additional forms you'll need.

Step 2: Gather Documentation

Collect your original return, all related schedules, and documentation supporting the corrections you need to make. You'll need to clearly identify each item that changed, the original amount, and the corrected amount.

Step 3: Complete the Form

Part I identifies your partnership and the type of filing. Part II (or Part III for certain entities) lists each line item from the original return that's changing, showing original amounts, net changes, and corrected amounts. Part V provides space to explain why you're making corrections and show detailed calculations.

Step 4: Calculate Imputed Underpayment (BBA Only)

If you're a BBA partnership, you must always calculate the imputed underpayment—even if it's zero or negative. This calculation determines whether the partnership owes tax at the partnership level or whether adjustments can be "pushed out" to individual partners. Attach Form 8980 if you're requesting modifications to reduce the IU.

Step 5: Prepare Partner Statements

For BBA partnerships filing an AAR, prepare Form 8986 for each partner showing their share of adjustments. Also complete Form 8985 as a transmittal document. Non-BBA partnerships prepare amended Schedule K-1 forms instead.

Step 6: Make Payment if Needed

If your BBA partnership has an imputed underpayment and isn't electing to push out adjustments, payment must accompany the filing. Use EFTPS or pay by check, clearly marking it as "BBA AAR Imputed Underpayment."

Step 7: File and Furnish to Partners

Mail the completed Form 1065-X with all attachments to the appropriate service center. On the same date, furnish the required statements (Forms 8986 or amended K-1s) to all partners IRS Instructions for Form 1065-X.

Common Mistakes and How to Avoid Them

Understanding common pitfalls can save significant time and prevent IRS correspondence. Here are the most frequent errors and how to avoid them:

Using the Wrong Form Revision

Always verify you're using the correct year's form revision. Using an outdated form for a tax year it wasn't designed for can cause processing delays. Check the IRS website for the current revision before starting.

Filing Paper When Electronic Filing Is Required

If your partnership files 10 or more returns annually, you must file electronically. Using Form 1065-X when you should file electronically via Form 8082 will result in rejection. Count all return types—payroll, excise, information returns—when determining if the threshold applies.

Confusing Amended Returns with AARs

BBA partnerships must file AARs, not amended returns. Filing the wrong type means checking incorrect boxes in Part I and potentially missing required forms like 8985 and 8986. Review your original return to confirm your BBA status before proceeding.

Missing Required Attachments

Every correction needs supporting documentation. If you're changing depreciation, attach the depreciation schedule. If correcting income, attach supporting statements. BBA partnerships must attach the IU calculation, even when zero. Missing attachments delay processing.

Providing Wrong Partner Statements

BBA partnerships should never provide amended Schedule K-1 forms to partners when filing an AAR—they must use Form 8986 instead. Conversely, non-BBA partnerships shouldn't use Forms 8986. Using the wrong forms confuses partners and the IRS.

Filing at the Wrong Address

Form 1065-X must go to the same service center that received your original return, not your current mailing address. Check the instructions for your specific location or review where you sent the original return.

Forgetting Signatures

An unsigned Form 1065-X isn't valid. For BBA partnerships, only the partnership representative can sign AARs. Ensure the proper person signs in the designated section.

Missing the Deadline

The three-year window is firm in most cases. Calendar the deadline carefully, remembering it runs from the later of filing date or due date, not from the end of the tax year itself.

What Happens After You File

Once the IRS receives your Form 1065-X, the processing journey begins—though the timeline and outcome vary based on whether you filed an amended return or an AAR.

For traditional amended returns (non-BBA partnerships), the IRS processes the correction and updates partnership records. They'll send corrected information to their systems, which may affect partner accounts if partners need to amend their individual returns. Processing typically takes several months depending on current processing volumes. The IRS generally doesn't send an acknowledgment unless there's a problem or they need additional information.

For BBA partnerships filing AARs, the process is more structured. If you calculated an imputed underpayment and paid it with the filing, the IRS processes the payment and applies it to the partnership's account. The IRS then updates partnership records to reflect the adjustments. If you elected to "push out" adjustments to partners instead of paying at the partnership level, each reviewed-year partner receives a Form 8986 showing their share of adjustments. These partners must then report the adjustments on their own tax returns using Form 8978 (for individuals and C corporations) or by either paying their own imputed underpayment or further pushing out to their partners (for pass-through entities).

Interest and penalties may apply depending on the nature of corrections. If adjustments result in additional tax owed, interest accrues from the original due date. Partners receiving pushed-out adjustments can make advance payments to stop interest from running further.

The IRS may contact you if they find inconsistencies, need clarification, or identify issues with your calculations. Respond promptly to any correspondence to avoid delays. You can contact the IRS Business & Specialty Tax Line if you need to check status after several months IRS BBA Partnership AAR Guidance.

FAQs

Q1: What's the practical difference between an amended return and an AAR?

An amended return is a straightforward correction that non-BBA partnerships make by filing Form 1065-X, issuing corrected Schedule K-1 forms to partners, and having partners amend their individual returns if needed. An AAR, required for BBA partnerships, operates through a centralized system where the partnership either pays an imputed underpayment tax itself or "pushes out" adjustments to partners through Form 8986. The AAR process is more complex because it's designed to handle audits and adjustments at the partnership level rather than requiring every partner to amend their individual returns.

Q2: Can I file Form 1065-X electronically?

Not directly. Form 1065-X itself is only for paper filing. However, if your partnership is required to file electronically (partnerships filing 10 or more returns of any type), you'll file an amended Form 1065 electronically with box G(5) checked for "Amended return," accompanied by Form 8082. This accomplishes the same goal but uses the electronic filing system.

Q3: How long does it take the IRS to process Form 1065-X?

Processing times vary significantly and typically take several months depending on IRS processing volumes and the complexity of the amendments. BBA AARs with imputed underpayment payments may process faster for the payment portion, but full processing of all adjustments can take similar timeframes. Unlike Form 1040-X (individual amended returns), there's no online tracking system for partnership amendments.

Q4: If my BBA partnership files an AAR, do my partners need to amend their personal returns?

It depends on your election. If your partnership pays the imputed underpayment at the partnership level, partners typically don't amend their original returns; instead, they report their share of adjustments on their current-year return when they receive Form 8986. However, if you elect "push out" or if there are non-IU adjustments, partners must take those adjustments into account on their tax return for the year they receive Form 8986, using Form 8978 for individual and C corporation partners.

Q5: What happens if I discover an error but the three-year deadline has passed?

Generally, once the three-year statute of limitations expires, you cannot file Form 1065-X. There are limited exceptions, such as if the IRS already identified the issue and extended the statute, or in cases of fraud. If you discover errors after the deadline, consult a tax professional to determine if any exceptions apply to your situation.

Q6: Can partners file an AAR on behalf of the partnership?

No. Only the partnership representative (PR) or their designated individual (if the PR is an entity) can file and sign an AAR for a BBA partnership. Individual partners cannot file AARs unless they are acting in their capacity as the PR. This centralized authority is a key feature of the BBA system.

Q7: Do I need to attach all the same schedules and forms that were on my original return?

No, you don't need to resubmit your entire original return. Only attach schedules, forms, and statements that are affected by or support the corrections you're making. If you're correcting a depreciation amount, attach the corrected depreciation schedule. If nothing changed on a particular schedule, you don't need to include it. However, for BBA partnerships, always include the required BBA-specific forms (8980, 8985, 8986) as applicable.

Sources

IRS About Form 1065-X
IRS Instructions for Form 1065-X (December 2024)
IRS File an Administrative Adjustment Request for a BBA Partnership

This guide is for informational purposes and reflects 2024 tax rules. Consult a qualified tax professional for advice specific to your partnership's situation.