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posted Jun 5, 2019 11:35:47 PM

General partner refuses to issue a K-1. Claims it isn't needed.

General partner is refusing to issue a K-1.  claims we are a small business and we are exempt from filing. 

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1 Best answer
Level 13
Jun 5, 2019 11:35:49 PM

Well.......the GP is totally wrong.  So depending on your current relationship with the GP or what it may be after you inform this individual that they are wrong, you can let them know the following:

  1. A penalty is imposed on the partnership, rather than the partners, for failure to file a timely or complete Form 1065.  This is provided in Section 6698.  This penalty is $200 per month per partner.
  2. The above penalty can be assessed if the return does not provide all the information required by law.
  3. Section 6031 states  "Each partnership required to file a return ....for any partnership taxable year shall (on or before the day on which the return for such taxable year was required to be filed) furnish to each person who is a partner or who holds an interest in such partnership as a nominee for another person at any time during such taxable year a copy of such information required to be shown on such return as may be required by regulations. 
  4. The information required to be shown in item 3 is detailed in the regulations for Section 6031.  This is the information provided on Schedule K-1.  The penalties for failure to provide this information to a partner is discussed in Section 6722.
If you are not getting the information required to accurately file your personal tax return, you can tell the GP about the penalties above and let this individual know you can certainly let the IRS know about the situation.  The penalties are very steep.

4 Replies
Level 13
Jun 5, 2019 11:35:49 PM

Well.......the GP is totally wrong.  So depending on your current relationship with the GP or what it may be after you inform this individual that they are wrong, you can let them know the following:

  1. A penalty is imposed on the partnership, rather than the partners, for failure to file a timely or complete Form 1065.  This is provided in Section 6698.  This penalty is $200 per month per partner.
  2. The above penalty can be assessed if the return does not provide all the information required by law.
  3. Section 6031 states  "Each partnership required to file a return ....for any partnership taxable year shall (on or before the day on which the return for such taxable year was required to be filed) furnish to each person who is a partner or who holds an interest in such partnership as a nominee for another person at any time during such taxable year a copy of such information required to be shown on such return as may be required by regulations. 
  4. The information required to be shown in item 3 is detailed in the regulations for Section 6031.  This is the information provided on Schedule K-1.  The penalties for failure to provide this information to a partner is discussed in Section 6722.
If you are not getting the information required to accurately file your personal tax return, you can tell the GP about the penalties above and let this individual know you can certainly let the IRS know about the situation.  The penalties are very steep.

Level 1
Aug 20, 2020 7:10:25 AM

Hello, I too have an LLC manager who refuses to share K1 info for 2019. How does one let the IRS know?  I would love to inform them. Thanks for the info @Rick19744 

Level 15
Aug 20, 2020 7:24:33 AM

@L1SA_D 

 

You might want to visit the following IRS site:

 

https://www.irs.gov/individuals/how-do-you-report-suspected-tax-fraud-activity

 

 

 

Generally, you would file Form 3949-A:

 

See https://www.irs.gov/pub/irs-pdf/f3949a.pdf

Level 13
Aug 20, 2020 9:40:05 AM

In general I agree with @Anonymous_ .

However, we are in different times and the last couple of years has basically completely overwhelmed the IRS.  They have millions of pieces of unopened mail, reduction in workforce, reduced funding, etc.

@L1SA_D your facts are not clear that you are a member of the LLC and entitled to a K-1, I will assume that you are.

My recommendation would be to meet with an attorney and have them draft a simple letter to the LLC managing member explaining the responsibilities of the LLC in filing timely returns and K-1's to the members.  Keep in mind that the LLC most likely at this point filed for an extension and the return is technically not due until September 15th.  While this will require some $$, this action will most likely get the ball rolling much quicker than attempting to get any results from the IRS.  This letter does not have to be anything that is long and complicated.  So before you get an attorney involved, make sure you understand if the LLC return is on extension, and if it is, then wait until after September 15th.