Press Room: Tax Release

February 27, 2012

IRS Issues Guidance on Electronic Delivery of Schedules K-1

On February 13, 2010, the Internal Revenue Service (IRS) issued Rev. Proc. 2012-17, which for the first time specifically outlines when and how a partnership may use electronic media as the sole mechanism for delivering Schedules K-1 to its partners. The new rule applies to K-1s provided to partners on or after February 13, 2012.

Failure to furnish the Schedule K-1 as required in Rev. Proc. 2012-17 can be deemed a failure to furnish a Schedule K-1 to the recipient, which is subject to penalties under Sec. 6722 for failure to furnish correct payee statements. Paper and electronic Schedules K-1 are required to be provided to recipients by the due date of Form 1065.

Under Rev. Proc. 2012-17, the partnership must receive the partner’s consent before providing K-1s electronically. Rev. Proc. 2012-17 also:

  • addresses how the consent can be provided electronically, including secure email and through the partnership’s internet site or portal;
  • addresses how partners are to be informed about changes in software;
  • defines how the partnership is to provide instructions about accessing and printing electronic statements; and
  • covers the partnership’s responsibility if the K-1 is undeliverable.

Many partnerships have used electronic delivery in the past as a means to satisfy their obligation to furnish statements to partners. Rev. Proc. 2012-17 provides the approach going forward for delivering required information. Complying with this guidance requires careful planning and the right process and technology.

For more information, or assistance in complying with Rev. Proc. 2012-17 please contact your WTAS advisor.