Instructions For Forms 8804, 8805, And 8813

Interest and Penalties

disposition of a U.S. real property

of Rev. Proc. 2016-55 available at

interest. A domestic partnership's

IRS.gov/irb/2016-45_IRB/ar12.html.

Interest

compliance with the requirement to pay

Reasonable cause. A partnership can

a withholding tax under section 1446

Interest is charged on taxes not paid by

seek a waiver of the penalty if the

satisfies the requirements under section

the due date, even if an extension of

partnership can establish it had

1445 for dispositions of U.S. real

time to file is granted. Interest is also

reasonable cause for the failure.

property interests. However, a domestic

charged on penalties imposed for failure

Failure To Furnish Correct

partnership that would otherwise be

to file, negligence, fraud, and

exempt from section 1445 withholding

Form 8805 to Recipient

substantial understatements of tax from

by operation of a nonrecognition

the due date (including extensions) to

A penalty can be imposed for each

provision must continue to comply with

the date of payment. The interest

failure to furnish Form 8805 to the

the requirements of Regulations section

charge is figured at a rate determined

recipient when due. The penalty can

1.1445-5(b)(2).

under section 6621.

also be imposed for each failure to give

Foreign partnerships. A foreign

the recipient all required information on

Late Filing of Form 8804

partnership subject to withholding under

each Form 8805 or for furnishing

A partnership that fails to file Form 8804

section 1445(a) during a tax year will be

incorrect information.

when due (including extensions of time

allowed to credit the amount withheld

to file) generally can be subject to a

The penalty for each failure to furnish

under section 1445(a), to the extent

penalty of 5% (0.05) of the unpaid tax

a correct 2017 Form 8805 to the

such amount is allocable to foreign

for each month or part of a month the

recipient is $260, with a maximum

partners, against its liability to pay the

return is late, up to a maximum of 25%

penalty of $3,218,500.

section 1446 withholding tax for that

(0.25) of the unpaid tax. The penalty

year. This credit is allowed on line 6d or

There are some situations where the

won't apply if the partnership can show

6e of the Form 8804 filed by the foreign

penalty under section 6722 is reduced

reasonable cause for filing late.

partnership.

or eliminated. This can apply if the

partnership:

If Form 8804 is filed more than 60

Reporting to Partners

Has average annual gross receipts of

days late, the minimum penalty will be

not more than $5 million during a

$210, or the amount of any tax owed,

When making an installment payment of

specified period of time,

whichever is smaller.

the section 1446 withholding tax, a

Corrects the failure to furnish within a

partnership must notify all foreign

If you receive a notice about penalty

specified period, or

partners of their allocable shares of any

and interest after you file Form 8804,

Has a de minimis number of failures

section 1446 withholding tax paid by the

send us an explanation and we will

to furnish correct Forms 8805.

partnership. The partners use this

determine if you meet reasonable-cause

information to adjust the amount of

There can also be a higher penalty

criteria. Don't attach an explanation

estimated tax that they must otherwise

imposed when the failure is due to

when you file Form 8804.

pay to the IRS. The notification to the

intentional disregard of the requirement

Late Filing of Correct Form

foreign partners must be provided within

to furnish timely correct information

10 days of the installment due date, or,

8805

returns. For more information, see

if paid later, the date the installment

section 3.52 of Rev. Proc. 2016-55,

A penalty can be imposed for failure to

payment is made. See Regulations

available at

IRS.gov/irb/2016-45_IRB/

file each Form 8805 when due

section 1.1446-3(d)(1)(i) for information

ar12.html.

(including extensions). The penalty can

that must be included in the notification

also be imposed for failure to include all

Reasonable cause. A partnership can

and for exceptions to the notification

required information on Form 8805 or

seek a waiver of the penalty if the

requirement.

for furnishing incorrect information. The

partnership can establish it had

penalty is based on when a correct

If a partnership has gross effectively

reasonable cause for the failure.

Form 8805 is filed.

connected income, it must file a

Late Payment of Tax

separate Form 8805 for each partner for

The penalty for each failure to file a

whom it paid section 1446 tax. In

The penalty for not paying tax when due

correct 2017 Form 8805 is $260, with a

addition, if the partnership reduces ECTI

is usually

of 1% (0.005) of the unpaid

maximum penalty of $3,218,500.

for state and local income tax

tax for each month or part of a month

deductions permitted under Regulations

There are some situations where the

the tax is unpaid. The penalty can’t

section 1.1446-6(c)(1)(iii) or relies on a

penalty under section 6721 is reduced

exceed 25% (0.25) of the unpaid tax.

Form 8804-C it receives from a partner

or eliminated. This can apply if the

The penalty won't apply if the

to reduce its section 1446 tax, it must

partnership:

partnership can show reasonable cause

complete a Form 8805 for the partner

Has average annual gross receipts of

for paying late.

even if no tax is paid on behalf of the

not more than $5 million during a

If you receive a notice about penalty

partner. The foreign partner must also

specified period of time,

and interest after you file Form 8804,

receive a copy of its Form 8805 by the

Corrects the failure to file within a

send us an explanation and we will

due date of the partnership return

specified period, or

determine if you meet reasonable-cause

(including extensions).

Has a de minimis number of failures

criteria. Don't attach an explanation

to file correct Forms 8805.

when you file Form 8804.

A foreign partner that is a foreign

trust or estate must provide to each of

There can also be a higher penalty

Failure To Withhold and Pay

its beneficiaries a Form 8805 completed

imposed when the failure is due to

Over Tax

as described under

intentional disregard of the requirement

Schedule T—Beneficiary

Information,

to file timely correct information returns.

Any person required to withhold,

later.

For more information, see section 3.51

account for, and pay over the

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Instructions for Forms 8804, 8805, and 8813 (2017)

Instructions For Forms 8804, 8805, And 8813 - 2017 Page 4

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