Instructions For Forms 8804, 8805, And 8813 - 2011 (Page 4 of 12) in pdf

If you receive a notice about penalty

8805; maximum penalty of $1,500,000

2. The last day of the partnership’s tax

and interest after you file Form 8804,

per year ($500,000 for a small business).

year for which the amount was paid.

send us an explanation and we will

3. The last day on which the partner

If the partnership intentionally

determine if you meet reasonable-cause

owned an interest in the partnership

disregards the requirement to report

criteria. Do not attach an explanation

during that year.

correct information, the penalty is

when you file Form 8804.

increased to $250 or, if greater, 10% of

However, the amount of section 1446

the aggregate amount of items required to

Late Filing of Correct Form

withholding paid during a tax year by the

be reported, with no maximum penalty.

8805

partnership is generally treated as an

For more information, see sections 6722

advance or draw under Regulations

A penalty may be imposed for failure to

and 6724.

section 1.731-1(a)(1)(ii) to the extent of

file each Form 8805 when due (including

Reasonable cause requests. Section

the partner’s share of income for the

extensions). The penalty may also be

6724(a) provides reasonable cause relief

partnership year. See Regulations section

imposed for failure to include all required

for failure to comply with sections 6721

1.1446-3(d)(2)(v) for more details.

information on Form 8805 or for

through 6724. File reasonable cause

furnishing incorrect information. The

A partner that wishes to claim a credit

requests with the address shown under

penalty is based on when a correct Form

against its U.S. income tax liability for

Where To File on page 1.

8805 is filed. For a Form 8805 required to

amounts withheld and paid under section

Adjustment for inflation. The penalty

be filed on or after January 1, 2011, the

1446 must attach Copy C of Form 8805 to

for failure to furnish Form 8805 under

penalty is:

its U.S. income tax return for the tax year

•

section 6722 will be adjusted for inflation

$30 per Form 8805 if the partnership

in which it claims the credit.

every 5 years beginning in 2013. See

correctly files within 30 days; maximum

See Regulations section

section 6722(f) for more information.

penalty of $250,000 per year ($75,000 for

1.1446-3(d)(2) for additional information.

a small business). A “small business” has

Late Payment of Tax

Publicly Traded

average annual gross receipts of $5

The penalty for not paying tax when due

million or less for the most recent 3 tax

Partnerships (PTP)

is usually

of 1% of the unpaid tax for

years (or for the period of time the

each month or part of a month the tax is

business has existed, if shorter) ending

A “publicly traded partnership” is any

unpaid. The penalty cannot exceed 25%

before the calendar year in which the

partnership whose interests are regularly

of the unpaid tax. The penalty will not

Forms 8805 were due.

traded on an established securities

•

apply if the partnership can show

$100 per Form 8805 if the partnership

market (regardless of the number of its

reasonable cause for paying late.

files more than 30 days after the due date

partners). However, it does not include a

or does not file a correct Form 8805;

If you receive a notice about penalty

PTP treated as a corporation under the

maximum penalty of $1,500,000 per year

and interest after you file Form 8804,

general rule of section 7704(a).

($500,000 for a small business).

send us an explanation and we will

A PTP that has effectively connected

determine if you meet reasonable-cause

If the partnership intentionally

income, gain, or loss must withhold tax on

criteria. Do not attach an explanation

disregards the requirement to report

distributions of that income made to its

when you file Form 8804.

correct information, the penalty per Form

foreign partners. The rate is 35%. The

8805 is increased to $250 or, if greater,

Failure To Withhold and Pay

PTP may not consider preferential rates

10% of the aggregate amount of items

when computing the section 1446 tax for

Over Tax

required to be reported, with no maximum

a partner. The partnership uses Form

Any person required to withhold, account

penalty. For more information, see

1042, Annual Withholding Tax Return for

for, and pay over the withholding tax

sections 6721 and 6724.

U.S. Source Income of Foreign Persons;

under section 1446, but who fails to do

Form 1042-S, Foreign Person’s U.S.

Reasonable cause requests. Section

so, may be subject to a civil penalty under

Source Income Subject to Withholding;

6724(a) provides reasonable cause relief

section 6672. The civil penalty is equal to

and Form 1042-T, Annual Summary and

for failure to comply with sections 6721

the amount that should have been

Transmittal of Forms 1042-S, to report

through 6724. File reasonable cause

withheld and paid over.

withholding from distributions instead of

requests with the address shown under

Other Penalties

following these instructions. It also must

Where To File on page 1.

comply with the regulations under section

Penalties may also be imposed, absent

Adjustment for inflation. The penalty

1461 and Regulations section 1.6302-2.

reasonable cause and good faith, for

for failure to file Form 8805 under section

failing to accurately report the amount of

6721 will be adjusted for inflation every 5

Tiered Partnerships

tax required to be shown on a return, if

years beginning in 2013. See section

The term “tiered partnership” describes

any portion of the resulting underpayment

6721(f) for more information.

the situation in which a partnership owns

is attributable to negligence, substantial

Failure To Furnish Correct

an interest in another partnership. The

understatement of income tax, valuation

Form 8805 to Recipient

former is an “upper-tier partnership” and

misstatement, or fraud. See sections

6662 and 6663.

the latter is a “lower-tier partnership.” An

A penalty may be imposed for each

upper-tier partnership that owns a

failure to furnish Form 8805 to the

Treatment of Partners

partnership interest in a lower-tier

recipient when due. The penalty may also

partnership is allowed a credit against its

be imposed for each failure to give the

A partnership’s payment of section 1446

own section 1446 liability for any section

recipient all required information on each

withholding tax on ECTI allocable to a

1446 tax paid by the lower-tier

Form 8805 or for furnishing incorrect

foreign partner generally relates to the

partnership for that partnership interest.

information. For a Form 8805 required to

partner’s U.S. income tax liability for the

be furnished on or after January 1, 2011,

If an upper-tier partnership provides

partner’s tax year in which the partner is

the penalty is:

appropriate documentation to a lower-tier

subject to U.S. tax on that income.

•

$30 per Form 8805 if the partnership

partnership, the lower-tier partnership

Amounts paid by the partnership under

correctly furnishes within 30 days;

may look through the partnership to the

section 1446 on ECTI allocable to a

maximum penalty of $250,000 per year

partners of such upper-tier partnership in

partner are allowed to the partner as a

($75,000 for a small business). A “small

determining its section 1446 tax due. The

credit under section 33. The partner may

business” has average annual gross

look through may apply only with respect

not claim an early refund of withholding

receipts of $5 million or less for the most

to the portion of the upper-tier

tax paid under section 1446.

recent 3 tax years (or for the period of

partnership’s allocation that is allocable to

Amounts paid by a partnership under

time the business has existed, if shorter)

partners of such partnership for which

section 1446 for a partner are to be

ending before the calendar year in which

appropriate documentation has been

treated as distributions made to that

the Forms 8805 were due.

received by the lower-tier partnership. For

•

partner on the earliest of the following:

$100 per Form 8805 if the partnership

more information, see Regulations

furnishes more than 30 days after the due

1. The day on which this tax was paid

section 1.1446-5(c) for upper-tier foreign

date or does not furnish a correct Form

by the partnership.

partnerships and Regulations section

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Instructions for Forms 8804, 8805, and 8813 (2011)

Instructions For Forms 8804, 8805, And 8813 - 2011 Page 4

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