IRS Guidance Enables Partnerships to Amend Tax Returns Which Creates Positive Impact for Some LIHTC Partnerships
On April 8, 2020, the IRS released Revenue Procedure 2020-23 which enables eligible partnerships to file amended returns for 2018 and 2019 rather than having to file an administrative adjustment request (AAR).
The reason for this guidance is to allow eligible partnerships to take advantage of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) tax relief for the year being adjusted (2018 or 2019), rather than delay the relief until the year the AAR is filed. Prior to this Revenue Procedure, if a BBA partnership had an adjustment to a previously filed return beginning in tax year 2018 or later, it was required to file an AAR. In most cases, the partners of the partnership would then reflect those adjustments in the year the AAR is filed, rather than in the year being adjusted. Without this latest guidance, partners would not have been able to take advantage of the tax benefits of the CARES Act until, most likely, 2021 when the 2020 partnership return is filed.
BBA Partnerships that have filed form 1065 and furnished all required Schedules K-1 for the taxable years beginning in 2018 or 2019, prior to April 8, 2020, may file amended partnership returns for those years prior to September 30, 2020.
This is significant to the Low-Income Housing Tax Credit Industry because the legislation states that “The amended returns may take into account tax changes brought about by the CARES Act as well as any other tax attributes to which the partnership is entitled by law.” This means that any eligible partnership receiving IRS Form(s) 8609 prior to September 30, 2020 would be able to amend a previously filed partnership return to claim credits in the 2018 tax year. The partners will then be able to receive the benefits immediately rather than in 2021 if an AAR had to be filed.
If you have any questions regarding this information, please feel free to contact Elizabeth Harriger, CPA, Partner & Director of Affordable Housing Services at McKonly & Asbury at firstname.lastname@example.org or by calling (717) 972-5727.
As further changes develop, we’ll continue to keep you informed. Be sure to check back to our COVID-19 Resource Center for additional information and updates.
This communication is intended to provide general information on legislative COVID-19 relief measures as of the date of this communication and may reference information from reputable sources. Although McKonly & Asbury has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this communication. Some of those modifications may be significant. As such, be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.