Tax Controversy Updates: IRS issues new Form 1065X and revised Form 8082

IRS Insights:

The IRS released new Form 1065X, Amended Return or Administrative Adjustment Request (AAR), which will change how many partnerships and real estate mortgage investment conduits (REMICs) amend previously filed tax returns. The Form 1065X will also be used by TEFRA partnerships as an Administrative Adjustment Request (AAR). The Form 1065X is to be used by partnerships, including electing large partnerships (ELPs), and REMICs to file an amended return or AAR in instances where the entity is not required to file, or has not elected to file, electronically. Additionally, the IRS released a revised Form 8082, Notice of Inconsistent Treatment or Administrative Adjustment Request (AAR).

Historically, the procedures for correcting an item reported on an original Form 1065 or 1065-B varied depending on the type of partnership making the correction. Partnerships subject to the TEFRA procedures (TEFRA partnerships) were instructed to make corrections to original partnership returns by making an AAR on a Form 8082 to be filed by the Tax Matter Partner (TMP) on behalf of the partnership. The TMP could elect to have the AAR treated as an amended partnership return (substitute return treatment) or a claim on behalf of the partners for refund or credit relating to a partnership item. Non-TEFRA partnerships were instructed to make corrections to originally filed returns by filing a revised Form 1065 and checking the amended return box. The Form 1065 filed by a non-TEFRA entity is treated as an informational return, and as a result the partners in the non-TEFRA partnership would file an amended return on their own with a copy of a revised Schedule K-1 distributed by the partnership to report the impact of the partnership adjustment.

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