Sadly, here is my assessment – the K-1 and K-3 is an IRS mess of their own making/doing and they are not owning up to it nor taking ownership of the problem. The bureaucrats knew the forms and instructions would not be ready in a timely manner but still implemented the filing requirement. Thus, creating a problem which will very likely prevent, before the filing deadline, the software companies from updating their software correctly, and preventing the partnerships from creating the K-3s with the needed information. Therefore, making it impossible for the taxpayers to submit a correct and/or complete return by the filing deadline.
I believe the partnerships took the path of least resistance for the filing deadline. I know I would. It is better to check box 16 and be wrong than to not check box 16 and be wrong.
- By checking box 16 and in fact not really needing the K-3 then the return would have to be amended with an unneeded K-3 form when the K-3s are finally ready from the partnerships.
- By not checking box 16 and in fact really needing the K-3 then the return would have to be amended with a needed K-3 form with the possibility of penalties and interest for both the partnership and taxpayers when the K-3s are finally ready.
According to all sources of communications (e-filing or USPS mailing) when you sign the return you attest to the fact – “Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete.”
- By submitting the return via USPS mail, we know that the return is true and correct, but not complete. The form K-1 is marked as we received it from the partnership. We know that the K-3s will not be ready before the filing deadline and thus we know it is not complete, but the return can be amended upon the receipt of the K-3s. And if the K-3s are in fact not needed then there should be no changes to the tax value and no penalty or interest.
- By submitting the return via e-filing, we know that the return is not true nor correct as we must alter the K-1 by unchecking block 16. At the same time, we know that the return is also not complete as the K-3 is still unavailable. I’m guessing the IRS would likely reject the e-file version if the submitted return values are checked against the K-1s submitted by partnerships. At the time of this posting, I have not seen any statements about the IRS rejecting an e-filed return; at the same time, most posts indicate the filers are holding off from making the changes and e-filing in the hopes of receiving updates to the software or filing instructions.
Since I owe a payment to both the IRS and the state, I believe it is in my best interest to USPS mail the federal return and e-file the state return. The state has no interest in the K-1 nor K-3 from what I can tell.
The irony is, 2021 is likely the last year I will have to deal with the partnerships and their K-1s.
Finally, I have wasted too much time and effort in trying to find the best filing means from both TT and the IRS, how I would like to charge both $15.00/hr. for my time and aggravation.
