IRS Delays Partnership Reporting Requirements with its Release of Notice 2019-66

On December 9, the IRS issued Notice 2019-66 in response to heavy criticism of certain partnership tax reporting requirements that it had proposed in the Fall of 2019. In particular, the IRS had sought to mandate partnerships’ reporting of partners’ “tax basis capital,” “net unrecognized Section 704(c) gain or loss,” and “Section 465 At Risk Activities,” which various practitioners argued were ambiguous terms of art and/or would require more time to determine than the IRS had allowed for. This article provides background regarding the changes to partnership tax reporting on Schedule K-1 that were previously proposed and discusses the IRS’s recent decision to hold off on implementing them until 2020, as well as other modifications to the Service’s original proposals.

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