If the due date falls on a weekend or holiday, the deadline is the next business day. Partnerships can request a six-month extension to file the form, moving the deadline to September 15th.

The 1065 Late Filing Penalty

When a partnership fails to file Form 1065 by the due date (including extensions), the IRS imposes a late filing penalty. As of the current guidelines, the penalty is $220 per month (or part of a month) the return 1065 late filing penalty   is late, multiplied by the number of partners in the partnership during the tax year. This penalty continues to accrue until the partnership files the return, up to a maximum of 12 months.

For example, if a partnership with 5 partners files its Form 1065 three months late, the penalty would be calculated as follows:

Penalty

=

5

partners

×

$

220

per partner

×

3

months

=

$

3

,

300

Penalty=5 partners×$220 per partner×3 months=$3,300

Implications of the Penalty

The late filing penalty can quickly become substantial, especially for larger partnerships. This penalty is assessed in addition to any interest and other penalties that may apply to any unpaid taxes due. Failing to file Form 1065 on time not only results in financial penalties but can also lead to further scrutiny from the IRS, potentially triggering audits or additional compliance checks.

How to Avoid the Penalty

Timely Filing: The most straightforward way to avoid the late filing penalty is to file Form 1065 on time. Partnerships should mark the March 15th deadline on their calendars and ensure they complete and submit the form before this date. If necessary, they should apply for an extension by filing Form 7004 before the original due date.

Accurate Record-Keeping: Maintaining accurate and organized financial records throughout the year can simplify the process of preparing Form 1065, making it easier to meet filing deadlines.

Professional Assistance: Hiring a tax professional or accountant who specializes in partnership tax returns can help ensure that Form 1065 is prepared correctly and filed on time. These professionals can also provide valuable advice on tax planning and compliance.

Use of Tax Software: Many partnerships use tax software to prepare and file their returns. These programs often include features that help track deadlines and alert users to upcoming due dates.

IRS Notifications: Partnerships should pay attention to any notifications or correspondence from the IRS regarding their filing status. Promptly addressing any issues or discrepancies can prevent further penalties and interest.

Abatement of Penalties

In certain circumstances, the IRS may abate (waive) the late filing penalty if the partnership can demonstrate reasonable cause for the delay. Reasonable cause may include situations such as natural disasters, serious illness, or other significant events that prevented timely filing. Partnerships seeking abatement should submit a written request to the IRS, explaining the reason for the delay and providing supporting documentation.

Conclusion

The 1065 late filing penalty is a significant financial consequence for partnerships that fail to meet their tax filing obligations. By understanding the requirements and deadlines associated with Form 1065, maintaining accurate records, seeking professional assistance, and utilizing tax software, partnerships can avoid these penalties. In cases where late filing is unavoidable, partnerships should explore the possibility of penalty abatement. Compliance with IRS filing requirements not only avoids penalties but also ensures the smooth operation of the partnership and maintains good standing with tax authorities.