IRS Issues Guidance Regarding Electronic Delivery of Schedules K-1

Wednesday, April 18, 2012

On February 13, the Internal Revenue Service released new guidance to partnerships regarding the electronic delivery of Schedules K-1 to its partners.  Revenue Procedure 2012-17, 2012-10 I.R.B. 453.  The guidance set forth strict requirements for the form and content of partner consents that a partnership must obtain if it wishes to rely solely on the electronic delivery of Schedules K-1 to fulfill its reporting requirements under Section 6031 of the Code.  Among these requirements, partnerships must make numerous, specific disclosures regarding the manner in which partners may access their electronic Schedules K-1 as well as the mechanics for providing and revoking consent.  Due to the complex and technical requirements of the guidance, partnerships should consult with their tax advisors regarding how these new requirements may apply to their particular circumstances.

BBA Tax Section Observation: While IRS seemed to be trying to help taxpayers and practitioners by modernizing its rules, in fact this new guidance disrupted settled expectations in the heart of tax busy season. Many practitioners who had issued electronic Schedules K-1 for years had to scramble to obtain timely consents that complied with the new rules.