Washington, D.C. (September 16, 2020) – The American Institute of CPAs (AICPA) submitted recommendations to the Department of the Treasury and the Internal Revenue Service (IRS) on proposed international changes to Form 1065; Schedule K-2, Partners’ Distributive Share of Items—International; and Schedule K-3, Partner’s Share of Income, Deductions, Credits, etc. – International.
The comments and suggestions AICPA provided are intended to support the efficient administration of tax compliance and reporting, while aligning information that partnerships already provide on schedules with the relevant tax forms used by partners.
The AICPA’s recommendations to the Schedule K-2 and Schedule K-3 package include:
Transmittal of Schedule K-3 in Portions
Minimizing Overreporting by Allowing Partnerships the Ability to Determine the Reporting Needs of its Partners
Appendix – Recommended Form and Instruction Changes
In addition to our first two primary recommendations, Part III includes a request for the IRS to make corresponding changes to other forms that are affected by the new schedules, including Form 1116, Foreign Tax Credit (Individuals, Estate or Trust), and Form 1118, Foreign Tax Credit – Corporations.
The AICPA also requests that the IRS delay implementation of the new Schedules K-2/K-3 for one year (to taxable years beginning after December 31, 2021) to allow entities to make preparations for the new reporting requirements and to ensure the IRS ample time to make adjustments to other forms.
An appendix is also attached to the letter to detail line-by-line comments to Schedules K-2/K-3 and the associated instructions.
Veronica L. Vera