Partnership Late Filing Penalty

Partnership and LLC/LLP entities that file as partnerships have a tax due date of April 15th. Five months extensions are granted which allows the return to be filed by September 15th. If returns are not filed by either of those dates strict penaltiesĀ of $195 per partner per month are assessed.

There is a way to have those penalties removed and I have been successful with a few clients. Rev Proc 84-35 allows for the penalty abatement. If the partners file their tax returns on time, April 15th or October 15th with extensions and the following circumstances apply then the penalty can be waived.

1)The partnership is a domestic partnership

2)10 or few partners – Husbands and wives are treated as one

3)All partners have to be natural persons or and estate of a deceased partner. Non-resident aliens are excluded

4)Each partner’s share of all items has to be the same

5)All partner’s share of income, deductions and credits has to be reported on the timely filed returns.