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Tax & AccountingApril 29, 2022

IRS delays e-File availability of Schedules K-2 and K-3 for S-Corporations

This week the IRS updated its frequently asked questions (FAQs) dealing with electronic filing of Schedules K-2, Shareholders' Pro Rata Share Items — International, and K-3, Shareholder's Share of Income, Deductions, Credits, etc. — International, filed by S corporations. You can find the full K-2 / K-3 FAQs by clicking here.

The IRS delayed the electronic filing protocol for these schedules from mid-June 2022 to July 24, 2022, in a revision to FAQ 7.

Taxpayers and entities impacted by this change may attach the completed schedules to their returns in PDF format for e-filing.

Both K-2 and K-3 are new for the 2021 tax year and must be filed by passthrough entities with "items of international tax relevance" and taxpayers filing Form 8865, Return of U.S. Persons With Respect to Certain Foreign Partnerships.

No change for partnerships, Form 8865 availability under MeF

There is no change to the January 2023 target for the availability of e-filing of Form 8865 under the IRS Modernized e-File (MeF) program.

Keep in mind that this date change relates only to S corporations. E-filing under the MeF program for partnership versions of Schedule K-2 and K-3 have been available since March 20, 2022.

Only the latest in K-2, K-3 changes in 2022

This is only the latest in a series of events surrounding K-2 and K-3 filing in 2022. In January, the IRS provided revised instructions to filing Schedules K-2 and K-3 for 2021. After many tax practitioners expressed concern regarding the new provisions, the IRS released FAQ 15 in February. This FAQ provides an "additional exception" for the 2021 tax year to filing the Schedules K-2 and K-3 for certain domestic partnerships and S corporations. I discussed IRS FAQ 15 in more detail in this blog post.

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Mark Friedlich
Vice President of US Affairs for Wolters Kluwer Tax & Accounting
Mark Friedlich, a CPA & tax lawyer, is the Vice President of US Affairs for Wolters Kluwer Tax & Accounting. He is a member of the U.S. Senate Finance Committee’s Chief Tax Counsel’s Advisory Board, advisor to 14 state taxing authorities, and has been a member of the American Bar Association’s Tax Section and AICPA’s Tax Section leadership teams. Prior to joining Wolters Kluwer he was a COO and Principal at PwC.

 

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