If your partnership discovered errors on a previously filed tax return, Form 1065-X is your tool to make things right. Whether you're correcting a simple math mistake or addressing complex adjustments under the Bipartisan Budget Act (BBA) partnership audit rules, understanding Form 1065-X can save your partnership from penalties and ensure compliance with IRS requirements.

What Form 1065-X Is For

Form 1065-X serves two primary purposes for partnerships and similar entities. First, it allows non-BBA partnerships to file amended returns to correct errors on previously filed Form 1065 (U.S. Return of Partnership Income), Form 1065-B (for electing large partnerships), or Form 1066 (for Real Estate Mortgage Investment Conduits or REMICs). Second, and more commonly in 2025, it enables BBA partnerships to file an Administrative Adjustment Request (AAR) to correct partnership-related items under the centralized partnership audit regime.

The key distinction matters: partnerships subject to BBA rules (generally all partnerships with tax years beginning after 2017, unless they elected out) cannot file traditional amended returns. Instead, they must file an AAR using Form 1065-X. This reflects a fundamental shift in how partnership tax errors are corrected, moving from partner-level adjustments to partnership-level accountability.

Only the partnership representative (PR) or designated individual (DI) can file a BBA AAR on behalf of the partnership. For non-BBA partnerships, any partner or LLC member can sign the amended return. The form cannot be used simply to change your partnership representative designation—you'll need Form 8979 for that purpose.

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

Common Scenarios for Filing

You should file Form 1065-X whenever you discover material errors affecting partnership income, deductions, credits, or partner allocations. Common scenarios include discovering unreported income, finding calculation errors, identifying incorrectly claimed deductions, receiving corrected K-1 schedules from other partnerships, or needing to correct partner capital account information. The sooner you file after discovering an error, the better—you'll minimize interest charges and demonstrate good faith compliance.

Timing and Deadlines

Timing is critical when filing Form 1065-X. Generally, partnerships have three years from the later of either the date the partnership return was filed or the last day for filing (excluding extensions) to submit corrections. For example, if your partnership filed its 2022 return on March 15, 2023, you typically have until March 15, 2026, to file Form 1065-X for that tax year.

Important Exception for BBA Partnerships

However, there's an important exception: BBA partnerships cannot file an AAR after receiving a Notice of Administrative Proceeding from the IRS. Once that notice arrives, the window closes, and you must address adjustments through the audit process instead.

Additional Timing Considerations (Push-Out)

For BBA partnerships filing AARs, the deadline becomes the extended due date of the adjustment year if pushing out adjustments to partners, creating additional timing considerations for multi-tier partnership structures.

Key Rules or Details for 2025

Use the Correct Form Revision

Use the correct form revision: For tax years beginning on or after January 1, 2023, use the August 2023 revision of Form 1065-X. The IRS provides different versions for different tax years, so ensure you download the correct one from IRS.gov.

Electronic vs. Paper Filing

Electronic vs. paper filing: The good news is that many partnerships can now file amended returns electronically using Form 1065 in conjunction with Form 8082, avoiding paper Form 1065-X altogether. Electronic filing is required if your original return was required to be filed electronically. For paper submissions, mail Form 1065-X to the same service center where the original return was filed.

BBA Partnership Requirements

BBA partnership requirements: If you're filing a BBA AAR, you must always calculate and include an imputed underpayment (IU) computation, even if the result is zero or negative. The IU represents the potential tax liability at the partnership level. You then have two choices: pay the IU when filing the AAR, or elect to “push out” the adjustments to your reviewed-year partners by having them report the changes on their individual or entity returns using Form 8986.

Partnership Representative Authority

Partnership representative authority: Only the current partnership representative or designated individual can sign and file a BBA AAR. This person has binding authority over all partners, making the PR designation critically important. All partners are bound by the PR's actions, regardless of their individual preferences.

Modification Requests

Modification requests: BBA partnerships that don't elect to push out adjustments can request modifications to reduce the imputed underpayment using Form 8980. These modifications account for situations like tax-exempt partners, partners in lower tax brackets, or adjustments to capital account balances that don't affect taxable income.

Step-by-Step (High Level)

Steps Overview

Step 1: Determine your partnership type and filing method.

First, identify whether your partnership is subject to BBA rules (most partnerships for 2025), TEFRA rules (older tax years), or neither. This determines which boxes to check on Form 1065-X. If eligible, consider electronic filing instead of paper Form 1065-X.

Step 2: Gather supporting documentation.

Collect your original return, identify all items requiring correction, calculate the correct amounts, and prepare explanations for each change. Document the reasons for adjustments thoroughly—the IRS may question changes, and clear documentation expedites processing.

Step 3: Complete the form.

Enter partnership identification information at the top. In Part I, check the appropriate boxes indicating your partnership type and whether you're filing an amended return or AAR. For BBA AARs, complete Section 2 indicating whether you're calculating an IU, electing to push out to partners, and whether you're requesting modifications. In Part II (or Part III for ELPs and REMICs), enter original amounts in column (a), the increase or decrease in column (b), and corrected amounts in column (c). Use Part V to provide detailed explanations for each change.

Step 4: Calculate and handle the imputed underpayment (BBA partnerships only).

Determine if your adjustments result in an IU. If yes, either prepare payment or elect to push out to partners. If electing push out, prepare Forms 8985 and 8986 for each reviewed-year partner. If paying the IU, calculate interest and penalties, and make payment via EFTPS, debit/credit card, or check when filing.

Step 5: Attach required forms and documentation.

Include amended Schedules K-1 (for non-BBA partnerships), Forms 8986 (for BBA AARs with push out election), Form 8980 (if requesting IU modifications), Form 8985 (summary of adjustments for push out), and any supporting schedules or statements explaining the changes.

Step 6: Sign and submit.

The appropriate person must sign: partnership representative or DI for BBA partnerships, tax matters partner for TEFRA partnerships, or any partner for non-BBA/non-TEFRA partnerships. Mail paper forms to the service center where the original return was filed, or submit electronically if using Form 1065 with Form 8082.

Step 7: Distribute partner statements.

For BBA partnerships, furnish Form 8986 to each reviewed-year partner on the date you file the AAR. For non-BBA partnerships, provide amended Schedules K-1 to partners so they can file their own amended returns if needed.

Common Mistakes and How to Avoid Them

Mistake #1: Using the wrong revision or form.

Different tax years require different form revisions. Solution: Always download the correct form revision for your tax year from IRS.gov, and check whether you should file electronically instead of using paper Form 1065-X.

Mistake #2: Filing an amended return when an AAR is required.

BBA partnerships must file AARs, not traditional amended returns. Solution: Determine your partnership's BBA status for the tax year in question. If your partnership didn't elect out of BBA for tax years beginning after 2017, you're subject to BBA and must file an AAR.

Mistake #3: Failing to calculate or pay the imputed underpayment.

Even if you plan to push out to partners, you must calculate the IU. Solution: Use the IRS guidance to properly compute the IU, document your calculation, and make the required election explicitly on the form if pushing out to partners.

Mistake #4: Missing the deadline.

The three-year window closes quickly, and BBA partnerships cannot file after receiving a Notice of Administrative Proceeding. Solution: File promptly upon discovering errors. Create calendar reminders for the three-year deadline for each return you file.

Mistake #5: Providing insufficient explanations.

Vague descriptions in Part V lead to IRS questions and processing delays. Solution: Provide clear, detailed explanations for each adjustment, including the original treatment, corrected treatment, and reason for the change. Reference supporting documents and calculations.

Mistake #6: Forgetting to furnish partner statements.

BBA partnerships filing AARs must furnish Forms 8986 to partners on the filing date, not amended K-1s. Solution: Prepare Forms 8986 before filing the AAR, distribute them to partners on the same day you file with the IRS, and retain proof of distribution.

Mistake #7: Incorrect signature authority.

Only the PR or DI can sign BBA AARs. Solution: Verify current PR/DI designation before filing. If there's uncertainty, file Form 8979 to designate or clarify the PR before submitting the AAR.

Mistake #8: Not coordinating with partners.

Partner-level amendments may be needed, especially for non-BBA partnerships. Solution: Communicate clearly with partners about the amendments, timeline for amended K-1s or Forms 8986, and their filing obligations.

What Happens After You File

Processing Timeline

Processing timeline: The IRS doesn't provide specific processing timeframes for Form 1065-X or partnership AARs, but expect several months minimum. Paper returns typically take longer than electronic submissions. Partnership amendments often involve complexity and require thorough IRS review.

IRS Review and Response

IRS review and response: The IRS will review your submission for completeness, mathematical accuracy, and reasonableness of adjustments. For BBA AARs, they'll verify IU calculations, validate push-out elections, and review modification requests. The IRS may accept your filing as submitted, request additional information or documentation, propose adjustments to your corrected figures, or in some cases, open an examination of the partnership return.

Payment Processing

Payment processing: If you paid an IU with your AAR, the payment processes immediately. If you elected to push out adjustments, the IRS tracks partner compliance. Partners receiving Form 8986 must report the adjustments on Form 8978 filed with their return for the reporting year (the year they receive Form 8986).

Judicial Review Option (TEFRA Partnerships Only)

Judicial review option (TEFRA partnerships only): If the IRS fails to act on a TEFRA AAR, the tax matters partner can file a petition for judicial review with the U.S. Tax Court, Court of Federal Claims, or District Court. This petition must be filed after six months but before two years from the AAR filing date.

Partner Obligations

Partner obligations: For non-BBA partnerships, partners should file amended individual or entity returns (Form 1040-X or applicable form) reflecting the corrected K-1 information. For BBA partnerships, partners receiving Form 8986 report the adjustments using Form 8978 with their return that includes the furnishing date—they generally don't file amended returns for prior years.

Interest and Penalties

Interest and penalties: Interest accrues on underpayments from the original due date until payment. For BBA partnerships paying an IU, interest is calculated from the reviewed year's return due date to the adjustment year's return due date or payment date, whichever is earlier. Partners receiving push-out adjustments pay interest from the attributable year's due date until they pay the additional tax with Form 8978.

No News Can Be Good News

No news can be good news: Unlike individual amended returns where you can track status online, there's no “Where's My Amended Partnership Return” tool. If the IRS accepts your submission without questions, you may never receive confirmation—the return is simply processed. Keep copies of everything you submit.

FAQs

1. Can I file Form 1065-X electronically?

It depends. Non-BBA partnerships can now file amended returns electronically using Form 1065 in conjunction with Form 8082, avoiding paper Form 1065-X entirely. However, Form 1065-X itself cannot be e-filed as a standalone document. If your original return was required to be e-filed, your amended return or AAR generally must also be e-filed. Check the Instructions for Form 1065 for current electronic filing procedures for amendments.

2. Do I need to file amended state partnership returns?

Most likely, yes. When your federal partnership return changes, it typically affects your state return. Each state has different procedures and deadlines for amended partnership returns. Contact your state tax agency promptly after filing Form 1065-X to understand your state filing obligations. Some states have information-sharing agreements with the IRS and will be notified of federal changes.

3. What's the difference between an amended return and an Administrative Adjustment Request (AAR)?

The key difference lies in who ultimately pays the tax. With traditional amended returns (for non-BBA partnerships), partners file amended individual returns and pay any additional tax. With an AAR (for BBA partnerships), the default is partnership-level assessment—the partnership itself pays the imputed underpayment calculated at the highest tax rate. However, BBA partnerships can elect to push out adjustments to partners, making them more similar to amended returns in effect. The procedural requirements also differ significantly.

4. What happens if partners disagree with the partnership representative's AAR?

Under BBA rules, the partnership representative has sole authority to act on behalf of the partnership, and all partners are bound by the PR's actions. Partners cannot individually challenge or modify an AAR filed by the PR. This makes choosing a capable, trustworthy partnership representative crucial. Partners concerned about PR authority should address this through partnership agreement provisions.

5. Can I file Form 1065-X to only change my partnership representative?

No. Form 1065-X cannot be used solely to change your partnership representative designation. Use Form 8979, Partnership Representative Revocation, Designation, and Resignation Form, for PR changes. However, if you're filing an AAR for substantive changes and need to designate or change the PR simultaneously, Form 8979 can be submitted with the AAR.

6. How long should I keep records after filing Form 1065-X?

The IRS recommends keeping tax records for at least three years from the date you filed the return. However, for amended returns and AARs, it's prudent to keep records for at least six years from the filing date of Form 1065-X. If the amendment involves substantial adjustments or could trigger an audit, consider retaining records longer. Keep copies of the amended return, all supporting documentation, proof of mailing or electronic submission, and records of payments made.

7. What if I discover another error after filing Form 1065-X?

You can file another Form 1065-X to correct the same tax year again, as long as you're still within the three-year statute of limitations and, for BBA partnerships, haven't received a Notice of Administrative Proceeding. Each subsequent Form 1065-X should reflect all previously accepted corrections plus the new changes. However, multiple amendments may attract IRS scrutiny, so take extra care to ensure accuracy and provide thorough documentation with each filing.

Sources: All information in this guide comes directly from official IRS sources, including the Instructions for Form 1065-X (Rev. December 2024), About Form 1065-X, and File an administrative adjustment request for a BBA partnership guidance pages on IRS.gov.