Even though there may be low activity or no activity there is still a responsibility to file a return two and a half months after the end of the year end.
The penalties for filing a partnership tax return (Form 1065) late are broken down into two categories, as listed below:
1. Failure to File Penalty
If the partnership fails to file Form 1065 by the due date (including extensions), the IRS imposes a penalty.
For 2025 and later years, the penalty is $235 per month, per partner for each month or part of a month the return is late. This penalty is calculated starting from the due date (or extended due date, if applicable) and continues until the return is filed.
Example:
If a partnership with 5 partners files 3 months late, the penalty would be:
- $235 x 5 partners x 3 months = $3,525.
2. Failure to Provide Schedule K-1s on Time
A partnership must provide each partner with a Schedule K-1, which reports their share of the partnership’s income, deductions, and other tax items.
If the partnership fails to provide these forms by the due date, the penalty is $310 per Schedule K-1, for each partner affected. This can add up if the partnership has many partners and does not file on time.
Example:
If a partnership with 5 partners files late, the penalty would be:
- $310 x 5 partners = $1,400.
Important Notes:
- Partnerships can request an extension for filing Form 1065, but this only extends the time to file the return, not the time to pay any taxes owed (if applicable).
- These penalties apply even if the partnership does not owe taxes, as they are based on the late filing of the return and the Schedule K-1 forms.
- Penalty amounts reflect IRS standards as of January 13, 2025.
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