Instructions For Forms 8804, 8805, And 8813

each month or part of a month the tax is

distributions instead of following these

Late Filing of Form 8804

unpaid. The penalty cannot exceed 25%

instructions.

A partnership that fails to file Form 8804

of the unpaid tax.

However, such a partnership may

when due (including extensions of time

elect instead to pay a withholding tax

to file) generally may be subject to a

Failure To Withhold and Pay Over

based on effectively connected taxable

penalty of 5% of the unpaid tax for each

Tax

income allocable to its foreign partners.

month or part of a month the return is

Any person required to withhold,

To do this, the partnership must

late, up to a maximum of 25% of the

account for, and pay over the

comply with the payment and reporting

unpaid tax. The penalty will not apply if

withholding tax under section 1446, but

requirements of these instructions by the

the partnership can show reasonable

who fails to do so, may be subject to a

date on which Form 8804 is due for the

cause for filing late. If the failure to

civil penalty under section 6672 equal to

partnership’s first tax year. Also, the

timely file is due to reasonable cause,

the amount that should have been

partnership must attach a statement to

attach an explanation to Form 8804.

withheld and paid over.

its first Form 8804 indicating that it is a

Late Filing of Correct Form 8805

publicly traded partnership that is

Other Penalties

electing not to withhold on distributions.

A penalty may be imposed for failure to

Penalties can also be imposed for

Once made, the election may be

file each Form 8805 when due (including

negligence, substantial understatement

revoked only with IRS consent.

extensions). The penalty may also be

of tax, and fraud. See sections 6662 and

imposed for failure to include all required

6663.

Tiered Partnerships

information on Form 8805 or for

furnishing incorrect information. The

The term “tiered partnership” describes

Treatment of Partners

penalty is based on when a correct

the situation in which a partnership

Form 8805 is filed. The penalty is:

owns an interest in another partnership.

A partnership’s payment of section 1446

$15 per Form 8805 if the partnership

withholding tax on effectively connected

The latter is a “subsidiary partnership.”

correctly files within 30 days; maximum

A partnership that directly or indirectly

taxable income allocable to a foreign

penalty of $75,000 per year ($25,000 for

owns a partnership interest in a

partner relates to the partner’s U.S.

a small business). A “small business”

income tax liability for the partner’s tax

subsidiary partnership is allowed a credit

has average annual gross receipts of $5

against its own section 1446 liability for

year in which the partner is subject to

million or less for the most recent 3 tax

U.S. tax on that income.

any section 1446 tax paid by the

years (or for the period of time the

subsidiary partnership for that

Amounts paid by the partnership

business has existed, if shorter) ending

partnership interest.

under section 1446 on effectively

before the calendar year in which the

connected taxable income allocable to a

A partnership that is a direct or

Forms 8805 were due.

partner may be claimed as a credit

indirect partner in a subsidiary

$50 per Form 8805 if the partnership

partnership and that has had section

under section 33. The partner may not

files more than 30 days after the due

claim an early refund of withholding tax

1446 tax payments made on its behalf,

date or does not file a correct Form

paid under section 1446.

will receive a copy of Form 1042-S or

8805; maximum penalty of $250,000 per

Form 8805. The partnership that is the

Amounts paid by a partnership under

year ($100,000 for a small business).

direct or indirect partner must in turn file

section 1446 for a partner are to be

If the partnership intentionally

these forms with its Form 8804 and

treated as distributions made to that

disregards the requirement to report

treat the amount withheld by the

partner on the earliest of:

correct information, the penalty per

subsidiary partnership as a credit

1. The day on which this tax was paid

Form 8805 is increased to $100 or, if

against its own liability to withhold under

by the partnership,

greater, 10% of the aggregate amount of

section 1446. The partnership that is a

2. The last day of the partnership’s tax

items required to be reported, with no

direct or indirect partner must also

year for which the amount was paid, OR

maximum penalty. For more information,

provide a copy of the forms it receives

3. The last day on which the partner

see sections 6721 and 6724.

to its partners, along with the

owned an interest in the partnership

information described in Reporting to

Failure To Furnish Correct Forms

during that year.

Partners on page 3. These statements

8805 to Recipient

and forms will enable those partners to

A partner that wishes to claim a credit

obtain appropriate credit for tax withheld

against its U.S. income tax liability for

A penalty of $50 may be imposed for

under section 1446.

amounts withheld and paid over under

each failure to furnish Form 8805 to the

section 1446 must attach Copy C of

recipient when due. The penalty may

Form 8805 to its U.S. income tax return

Specific Instructions

also be imposed for each failure to give

for the tax year in which it claims the

the recipient all required information on

credit.

Address

each Form 8805 or for furnishing

incorrect information. The maximum

Include the suite, room, or other unit

Publicly Traded Partnerships

penalty is $100,000 for all failures to

number after the street address. If the

furnish correct Forms 8805 during a

Post Office does not deliver mail to the

The term “publicly traded partnership”

calendar year.

street address and the partnership (or

means any partnership whose interests

If the partnership intentionally

withholding agent) has a P.O. box, show

are regularly traded on an established

disregards the requirement to report

the box number instead of the street

securities market (regardless of the

correct information, the penalty is

address.

number of its partners). However, it does

increased to $100 or, if greater, 10% of

not include a publicly traded partnership

If the partnership has a foreign

the aggregate amount of items required

treated as a corporation under the

address, enter the number and street,

to be reported and the $100,000

general rule of section 7704(a).

city, province or state, postal code, and

maximum penalty does not apply. For

country. Do not abbreviate the country

A publicly traded partnership that has

more information, see sections 6722 and

name.

effectively connected income, gain, or

6724.

loss, generally must withhold tax at a

rate of 39.6% on distributions made to

Late Payment of Tax

foreign partners. In this situation, the

The penalty for not paying tax when due

partnership uses Forms 1042 and

is usually

⁄

of 1% of the unpaid tax for

1042-S to report withholding from

Page 4

Instructions For Forms 8804, 8805, And 8813 - 1994 Page 4

Related Articles

Related forms

Related Categories