IR-2021-98: Draft Schedules K-2 and K-3 released to enhance reporting of international tax matters by pass-through entities

IRS Newswire April 30, 2021
News Essentials What's Hot News Releases IRS - The Basics IRS Guidance Media Contacts Facts & Figures Around The Nation e-News Subscriptions The Newsroom Topics Multimedia Center Noticias en Español Radio PSAs Tax Scams The Tax Gap Fact Sheets IRS Tax Tips Armed Forces Latest News Home IRS Resources Compliance & Enforcement Contact My Local Office Filing Options Forms & Instructions Frequently Asked Questions News Taxpayer Advocate Where to File IRS Social Media	Issue Number:    IR-2021-98 Inside This Issue Draft Schedules K-2 and K-3 released to enhance reporting of international tax matters by pass-through entities WASHINGTON — The Treasury and the IRS released today updated early drafts of new Schedules K-2 and K-3 for Forms 1065, 1120-S, and 8865 for tax year 2021 (filing season 2022). The schedules are designed to provide greater clarity for partners and shareholders on how to compute their U.S. income tax liability with respect to items of international tax relevance, including claiming deductions and credits. The early release drafts of the schedules are intended to give a preview of the changes before final versions are released.  The release of an early draft of the instructions for the schedules is planned for this summer. The redesigned forms and instructions will also give useful guidance to partnerships, S corporations and U.S persons who are required to file Form 8865 with respect to controlled foreign partnerships on how to provide international tax information.  The updated forms will apply to any persons required to file Form 1065, 1120-S or 8865, but only if the entity for which the form is being filed has items of international tax relevance (generally foreign activities or foreign partners). The changes do not affect partnerships and S corporations with no items of international tax relevance. The Treasury Department and the IRS released prior drafts of Schedules K-2 and K-3 for the Form 1065 in July 2020 and engaged with stakeholders to solicit input on the changes.  Helpful comments were received, and changes have been made to the schedules and instructions as appropriate. To promote compliance with adoption of Schedules K-2 and K-3 by affected pass-through entities and their partners and shareholders, the Treasury Department and the IRS intend to provide certain penalty relief for the 2021 tax year in future guidance. Back to Top         Thank you for subscribing to the IRS Newswire, an IRS e-mail service. If you know someone who might want to subscribe to this mailing list, please forward this message to them so they can subscribe. This message was distributed automatically from the mailing list IRS Newswire. Please Do Not Reply To This Message.

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