Partnership penalty abatement Rev. Proc. 84-35

Technical topics regarding tax preparation.
#21
EADave  
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Hilarious! I hadn’t thought about sensory sensitive service animals! Hey Spell, is that alliteration or onomatopoeia? Me thinks alliteration.

SJ is on point, I too, would recommend contacting PPS if you have a POA just as SJ suggested and then contact the Collection Agency (or ask PPS) to request a collection hold until the response is worked. Please don’t forget to update us on the outcome. I do fear a favorable response from the IRS because if it was just a “fluke”, I’d hate to rely on it as Gospel, but maybe it will spur the IRS to provide some clear(er) guidance.

Also, from what I was told, the case does not get kicked back to IRS until the collection agency makes the determination they are not authorized to work the case. This happened to my client recently. You and the client, if under POA, will receive a letter indicating the case was returned to the IRS. Like, who’s on first Scooby???
 

#22
Andrew  
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Some of you already indicated that penalty abatement under Rev. Proc 84-53 is no longer available. If you elect out of the new partnership audit rules, you may still be able to use Rev. Proc. 84-53. Can a partnership return be amended to change the election so a client becomes eligible for 84-53?
 

#23
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Wow, yet another reason to elect out.
 

#24
sjrcpa  
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#25
EADave  
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That "timely filed return" thing is a double-edged sword indeed. You can't amend if you file late, and if you file late, the election is invalid anyway. So, if you file late, and the election to opt out must be made on a timely filed return, when you file late are you giving the IRS permission to use the audit regime if they select your return for audit?

Sounds like filing late, as long as you file the K1s and the individuals file their returns timely, may not be so bad after all? Or, did I just open a portal that can never be closed?
 

#26
Andrew  
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Sjrcpa, thanks for posting the link. Next year I may just mark the box "opt out" of centralized partnership audit regime.
 

#27
MWPXYZ  
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Rev Proc 84-35 Section 3.01 and .02 states:

".01 A domestic partnership composed of 10 or fewer partners and coming within the exceptions outlined in section 6231(a)(1)(B) of the Code will be considered to have met the reasonable cause test and will not be subject to the penalty imposed by section 6698 for the failure to file a complete or timely partnership return, provided that the partnership, or any of the partners, establishes, if so requested by the Internal Revenue Service, that all partners have fully reported their shares of the income, deductions, and credits of the partnership on their timely filed income tax returns.

.02 Partnerships having a trust or corporation as a partner, tier partnerships, and partnerships where each partner's interest in the capital and profits are not owned in the same proportion, or where all items of income, deductions, and credits are not allocated in proportion to the prorata interests, do not come within the exception provisions of section 6231(a)(1)(B) of the Code and, are subject to the penalty imposed by section 6698. "

It seems that one needs Section 6231(a)(1)(B) for Rev Proc 84-35 to be applicable.

Pub. L. 114–74, title XI, § 1101, Nov. 2, 2015, 129 Stat. 625, 638, provided that, applicable to returns filed for partnership taxable years beginning after Dec. 31, 2017, section 6231 was repealed.

A new Section 6231, "Notice of proceedings and adjustment" stands in its place.
 

#28
Joan TB  
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I have been reading all this about the FT penalty abatement as it pertains to partnership, and I am still confused. Partnership of 2 individuals. If we just can't get it finished today, would the FTA still be available? It is amazing the time I have spent on their books trying to get things cleaned up (to the detriment of other clients) and now holding my breath if I am gonna get it done today. Finishing it in order to have both their individual returns filed timely shouldn't be a problem -- I really want all this off my desk! It is just TODAY that might be a problem. Since the partners are Mom & Son, I guess losing the opportunity to opt out of the audit regime probably won't be too bad.

I appreciate any additional explanations. Going on 2 hours sleep today as it is.
 

#29
Doug M  
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No, don't use up your FTA with this, if you meet the requirements of Rev Proc 84-35. Its like an automatic abatement. I haven't used it for any 2018 returns, but I doubt it would be denied.

https://www.bradfordtaxinstitute.com/En ... _84-35.pdf

Andrew spelled them out in his post #1. BTW, the penalty is only for one month if you have valid extn and file by 10/15.
 

#30
utsllc  
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I have a client that came to me late for a partnership return and there is no way to finish it today.

Can somebody clarify whether the Rev. Proc 84-35 is available in either of the cases of opting in or out of the centralized partnership audit regime under section 6221(b)?

The partnership is simple, just two family members.

Thank you!
 

#31
Joan TB  
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Post 27 says
It seems that one needs Section 6231(a)(1)(B) for Rev Proc 84-35 to be applicable
and that

Pub. L. 114–74, title XI, § 1101, Nov. 2, 2015, 129 Stat. 625, 638, provided that, applicable to returns filed for partnership taxable years beginning after Dec. 31, 2017, section 6231 was repealed.


That is why I am confused. So it appears that Rev.Proc. 84-35 cannot be used for 2018 and later. And yes, I anticipate
the return will get done by tomorrow, if not today.
 

#32
jon  
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Years ago I had a partner that said if he could not get a return done he did guesses and would amend the return later. I always thought you had trouble for filing wrong information. His response was guesses have always been permitted in filing tax information. As far as I know he never got into trouble.
 

#33
utsllc  
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Joan TB wrote:
That is why I am confused. So it appears that Rev.Proc. 84-35 cannot be used for 2018 and later. And yes, I anticipate
the return will get done by tomorrow, if not today.


Has anybody used it successfully for 2018 and if so what were the circumstances? Or have you gotten a rejection/etc.?
 

#34
Joan TB  
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Just sent the partnership return (about 10:45pm here) so I won't need to test the availability of the Rev Proc for 2018 partnership returns -- YAY!!
 

#35
MWPXYZ  
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"BTW, the penalty is only for one month if you have valid extn and file by 10/15."

Doug, would you have a cite for this?
 

#36
Doug M  
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#37
EADave  
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I swear, I’d rather read translated VCR instructions than IRS speak sometimes.

What does this part of the revised Rev Proc mean?

“The partnership has not elected to be subject to the consolidated audit procedures under I.R.C. §§ 6221 through I.R.C. § 6233.”

Does this mean the Partnership will qualify for relief if they didn’t make the audit regime election on their return? I thought it was a given since the election must be made on a timely filed return. Why even mention this in the Rev Proc? If they timely file, they don’t need the Rev Proc?

Or, am I misinterpreting this sentence? Wouldn’t be the first time!!
 

#38
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Just received a Rev Proc 84-35 for a 2018 1065. i thought it was gone but asked anyway. Had used up their FTA two years ago.
 

#39
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Good to know! Thanks for sharing!
~Captcook
 

#40
juro  
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lenraphael wrote:Just received a Rev Proc 84-35 for a 2018 1065. i thought it was gone but asked anyway. Had used up their FTA two years ago.


did u get a letter saying it hot waived? i got several in process myself.
 

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