Instructions For Form 3 - Massachusetts Partnership Return

General Instructions

This booklet contains the instructions needed for completing your

When Must a Partnership File a Return?

Massachusetts partnership return. The Massachusetts Schedule 3K-1

A Massachusetts partnership return, Form 3, must be filed if the

parallels federal Schedule K-1, which gathers information on each

partnership meets either of the following criteria:

partner separately.

• has a usual place of business in Massachusetts; or

The instructions are divided into two sections designed to lead you

• receives federal gross income of more than $100 during the tax-

through the form and answer your questions along the way.

able year that is subject to Massachusetts taxation jurisdiction under

The first section — General Instructions — answers commonly

the U.S. Constitution.

asked questions such as, “How Is a Partnership Taxed?”

How Is a Partnership Taxed?

The second section — Specific Instructions — provides informa-

A partnership is not directly subject to income tax. Instead, each part-

tion on each part of Form 3 and Schedule 3K-1.

ner is taxed on the partner’s share of the partnership income, whether

New Current Code Provision

distributed or not. Form 3 is a legally required informational return

As a general rule, Massachusetts will not adopt any federal tax law

under Massachusetts General Laws, Ch. 62C, and subject to pen-

changes incorporated into the Code after January 1, 2005. However,

alty for late filing.

certain specific provisions of the personal income tax automatically

How Does Schedule 3K-1 Work?

adopt the current Code. Effective for tax years on or after January

1, 2010, a new current Code provision has been adopted. See TIRs

Schedule 3K-1 is designed to allow the partnership to report each

98-8, 02-11, 07-4 and 09-21 for further details on Massachusetts’ per-

partner’s distributive share of partnership income separately.

sonal income tax current Code provisions.

How Does Each Partner Report

For a full discussion of 2012 major tax changes, see the Form 1 in-

Partnership Income?

structions. These are available in the Form 1 booklet or online at

Each partner must report the partner’s distributive share of each item

DOR’s website

of partnership income during the taxable year on the partner’s Mass-

New Requirements for Partnerships

achusetts tax return. The following table shows which return should

be filed by each type of partner:

For tax years beginning on or after January 1, 2009, pass-through en-

tities, including partnerships, have new filing obligations with regard

to their non-resident partners or members. A partnership is required

Type of partner

Form to file

to determine which of its partners are non-residents, and to ascertain

Full-year resident individual . . . . . . . . . . . . . . . . . . . . . 1

how its non-resident partners will be complying with their Massachu-

Nonresident/part-year resident individual . . . . . . . . . . 1-NR/PY

setts filing obligation. A partnership must withhold Massachusetts

Trust or estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

tax on the distributive share of any partner that does not certify to

Domestic or foreign corporation . . . . . . . . . . . . . . . . . . 355

the partnership that the partner will be meeting its tax obligation in

Domestic or foreign corporation

some other manner. For more information on how to comply with the

(part of a Massachusetts combined report) . . . . . . . 355U

withholding obligation, see the Guide for Pass-Through Entities.

Domestic or foreign S corporation . . . . . . . . . . . . . . . . 355S

Guaranteed Payments to Partners

Each nonresident partner must report the partner’s distributive share

Guaranteed payments made to non-resident partners are appor-

of partnership income from any of the following categories:

tioned as ordinary income of the partnership.

• income derived from or connected with the partnership business

Privacy Act Notice

carried on in Massachusetts;

Under the authority of 42 U.S.C. sec. 405(c)(2)(C)(i), and M.G.L. c.

• income from the ownership of any interest in real or tangible per-

62C, sec. 5, the Department of Revenue has the right to require an

sonal property located in Massachusetts; or

individual to furnish his or her Social Security number on a state tax

return. This information is mandatory. The Department of Revenue

• interest, dividends, annuities and capital gains from property em-

uses Social Security numbers for taxpayer identification to assist in

ployed in the partnership business carried on in Massachusetts.

processing and keeping track of returns and in determining and col-

Note: A nonresident limited partner of a limited partnership engaged

lecting the proper amount of tax due. Under M.G.L. c. 62C, sec. 40,

exclusively in buying, selling, dealing in or holding securities on its

the taxpayer’s identifying number is required to process a refund of

own behalf and not as a broker is not subject to tax on income from

overpaid taxes. Although tax return information is generally confiden-

such partnership.

tial pursuant to M.G.L. c. 62C, sec. 21, the Department of Revenue

may disclose return information to other taxing authorities and those

Qualified electing nonresident partners may participate in a com-

entities specified in M.G.L. c. 62C, secs. 21, 22 or 23, and as other-

posite tax return as defined in the Nonresident Regulation 830

wise authorized by law.

CMR 62.5A.1(12)(f). A composite return is filed electronically on a

Form NRCR.

Instructions For Form 3 - Massachusetts Partnership Return - 2012 Page 3

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