Partnership penalty abatement Rev. Proc. 84-35

Technical topics regarding tax preparation.
#41
juro  
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got a waiver today :D
not the first time for this entity.
 

#42
EADave  
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Congrats! I sent off 6 of them last week (same owners of all six and partners timely filed personal returns). I’ll let you know once we receive response from the KGB, err, I mean the IRS.
 

#43
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set me straight on one point: what is the effect on getting 84-35 relief if the audit regime is elected?
 

#44
juro  
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lenraphael wrote:set me straight on one point: what is the effect on getting 84-35 relief if the audit regime is elected?


i always select the Yes box for q#25.

Is the partnership electing out of the centralized partnership audit regime under section 6221(b)? Yes.
 

#45
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is that a year by year or annual election, or permanent one?
 

#46
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is that a year by year or annual election, or permanent one?
Annual
Dave

Taxation is the price we pay for failing to build a civilized society. ~ Mark Skousen
 

#47
dave829  
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The IRS has issued Program Manager Tax Advice (PMTA-2020-01) stating that Rev. Proc. 84-35 is not obsolete despite the repeal of 6231(a)(1)(B) by the Bipartisan Budget Act of 2015, and that it will continue to apply relief from the late filing penalty to small partnerships.

https://www.irs.gov/pub/lanoa/pmta-2020-01.pdf
 

#48
MWPXYZ  
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Good news! Considering prior IRS resistance to the abatement I assumed that they would allow this relief to die.

We can add 6231(a)(1)(B) to the list of obsolete Code Sections that are still part of the tax law along with 48(l)(3)(A)(ix) and 48(l)(15) that define Alternative Energy Property and Biomass Property!
 

#49
EADave  
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That Biomass Property is a huge bummer. I spent a king's ransom on converting my two turntables and a microphone (DJ Business) into a steam powered, photosynthesis-hybrid, sensory controlled, retro-fitted boombox; total waste of $$$$$.

All jokes aside, you two beat me to this, darn it, but thank you for posting this very helpful information!
 

#50
Andrew  
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MWPXYZ wrote:You can look up previous discussions, but I believe that Rev Proc 84-35 does not apply to 2018 partnership returns due to the repeal of Section 6231 and the "new" Section 6231 under the BBA, effective for 2018.


Good news. I got the penalty abated based on Rev Proc 84-35.
 

#51
EADave  
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I’m here to say I received the same abatement using the Rev Proc over the phone with PPS. The agent asked me how I knew both partners timely filed their personal returns. I told her, “Because, my dear, I was the one to file their returns timely, sugar britches.” You have to sweet talk them sometimes, you know.

I’m glad the Rev Proc still works; now the IRS and I are like peas and carrots again.
 

#52
CPAClay  
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EADave. I'm having the same questions you did in regards to how the election out of the Centralized Partnership Audit Regime on a late return not being valid, and the application of the Rev. Proc. 84-53. I haven't been able to find any reference to this issue anywhere else.

Since you said your were successfully accepted, was the case that you did not elect out of the CPA regime, and they still accepted the 84-53 waiver? Or did you elect out on the late filed return, and they accepted at that point.

Also, is there any way to request the 84-53 waiver WITH the late filing? Assuming you have to wait for the letter, but seeing if anyone else has tried doing it with the return itself.
 

#53
EADave  
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Wow, sorry Clay, I totally missed this sir. I recall on this particular return, I elected out of the regime which is the reason why I called the IRS, instead of sending the letter.

But, now that we can't get anyone at the IRS to answer their phones, I will pose your question to the board so we all understand. If a Partnership elects out of the Audit Regime and the 1065 is filed late, but the Partners filed their returns timely (extensions included), and all partners are individuals, will the Partnership be eligible for reasonable cause relief under Rev Proc 84-35?

This puts the Partnership at an advantage IF the 1065 has yet to be filed, and the extended due date is still valid for the individual partners. Just check or uncheck the box and move forward with filing the 1065 late, request relief and Bob is your Uncle!

Clay, it is my understanding the election out of the Audit Regime must be done in a timely manner, which is the crux of this issue. If the 1065 is filed late, the election out of the Regime is not available, thereby potentially (depending on the meaning of the Rev Proc's wording) making the 84-35 relief moot, if it is the case that you must elect out of the Regime to obtain relief provided in the Rev Proc.

Here is the Rev Proc language we are referring to: "The partnership has not elected to be subject to the consolidated audit procedures under IRC 6221 through IRC 6233." Does this mean the election out precludes the relief? It sounds like the IRS is saying, if you elect out of the regime, you do not qualify for relief under Rev Proc 84-35. Anyone here agree/disagree?
 

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