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2017 changes to IRS Form 1065

2017 changes to IRS Form 1065

If you file returns for partnerships or LLCs treated as partnerships, you will likely use Form 1065. Here are some of the key changes for 2017 for this form, from the IRS draft released in November 2017. As always, draft forms are not final, but can be used to prepare in advance for expected changes.

Who Signs

The first change is who can sign the return. Starting with 2017 returns, per draft instructions, the 1065 return must be signed by a partner of the partnership or any member of an LLC. This is different from previous years

  • Previously, a managing member was required for LLCs. Indeed, the passive members are unlikely to know the relevant details to help you prepare the return. However, in some cases this might make the signature process easy because the passive member may be more easily available. If you e-File, the corresponding signature form for 2017, 8879PE, also shows the same requirement of any partner or member for the signature, in the draft version.

  • Previously, receivers, trustees, or assignees, could sign the 1065, such as for a partnership filing bankruptcy. This provision seems to be removed for 2017, per the draft instructions.

Address

Another change is in the address used where the return must be filed. This is only relevant if you still file paper returns, but if you do, then for entities in Georgia, Illinois, Kentucky, Michigan, Tennessee, and Wisconsin there is a new filing address. This applies to entities with less than $10 million in assets and not filing Schedule M-3. Again, draft information should be verified on the final form.

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BBA Audit Regime

The other change coming right after Dec 31, 2017 is of course the much talked about audit regime, as a result of the Bipartisan Budget Act (BBA) of 2015. Partnerships with 100 or fewer partners may be able to elect out if they qualify, and you should review if this option helps your client at all. A more detailed discussion of the implications is covered here. There may be action items for you to recommend to your clients now, such as determining the powers of the partnership representative.

More Changes

A few other changes are applicable to less common situations, such as for foreign corporations with wholly owned domestic disregarded entities (DEs) and for persons required to file Form 8975 (owners of certain entities with $850 million or more in revenue). These can be perused in the available IRS draft if applicable for your clients.

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