How it works
Partnerships and multi-member LLCs taxed as partnerships file Form 1065 to report income at the entity level and pass it through to partners on Schedule K-1. The partnership generally pays no income tax. The return is due March 15 for calendar-year entities, and the late-filing penalty accrues per partner per month. Partnerships with foreign partners or foreign activity have additional withholding and information return obligations.
Why it matters
Since 2018 partnership audits operate under the centralized regime: the partnership itself can be assessed, the partnership representative controls the audit, and elections have short deadlines.
Related: Schedule K-1, Form 8865. Read more: IRS partnership audits.
