Forms 1065 and 1066 do not require the partnership representative’s TIN, according to a supplement added to the Form 1065 instructions. The new centralized audit rules require partnerships to use a partnership representative to represent them for tax audits.
Form 1065 Instruction Supplement and Partnership Representatives
The IRS updated the 2018 Instructions for Form 1065, U.S. Return of Partnership Income. The supplement states that partnerships may enter their partnership representative’s taxpayer identification number (TIN) as all zeros under “Designation of Partnership Representative.” Further, the supplement instructions say this rule applies to both Form 1065 and Form 1066, U.S. Real Estate Mortgage Investment Conduit (REMIC) Income Tax Return.
In addition, when the partnership representative is an entity, and the partnership designates an individual to act on that entity’s behalf, partnerships may enter all zeros for the designated individual’s TIN.
For example, they may enter 00-0000000 or 000-00-0000 for the TIN in this space.
Caution: Although the update states that the change applies to Form 1066, as of now the update appears only on Form 1065 and its instructions. The IRS has not issued a supplement for Form 1066 instructions.
Existing 1065 Instructions for Partnership Representatives
The supplement states that the change, allowing zeros in place of TINs, will be incorporated into the next revision of the instructions.
The Form 1065 instructions, as they currently appear, state that:
- the full TINs of the partnership representative and designated individual must be shown on the Form 1065 filed with the IRS; and
- these TINs may be truncated on the copies of Form 1065 that the partnership furnishes to others, such as its partners.
Centralized Partnership Audit Regime
The use of a partnership representative and designated individual are part of the new centralized partnership audit regime.
The centralized partnership audit regime replaced the Tax Equity and Fiscal Responsibility Act (TEFRA) audit rules for partnerships. The centralized partnership audit regime generally applies to tax years beginning after 2017.
Under the new rules, partnerships are required to designate a partnership representative.
The partnership representative has the sole authority to act on behalf of the partnership under the centralized partnership audit regime.
If the partnership representative is an entity, the partnership must also appoint a designated individual to act on the entity partnership representative’s behalf.
Final centralized partnership audit regime regulations were issued in December 2018.
Changes to Form 1065
The IRS made changes to the 2018 Form 1065 to reflect:
- the centralized partnership audit regime; and
- the Tax Cuts and Jobs Act (TCJA).
By Robert Recchia, J.D., M.B.A., C.P.A.