IRC 6031 and IRC 6037: Partnership and S-Corp Return Filing Requirements

1. Overview: Two Statutes, Two Pass-Through Returns

Partnerships and S corporations are the two dominant pass-through structures in U.S. federal taxation. Neither entity pays income tax at the entity level under normal circumstances. Instead, each owner reports their allocable share of income, deductions, credits, and other items on their own return. That pass-through mechanic only works, however, if the entity itself files an annual information return that reports the aggregate figures and allocates them to each owner via Schedule K-1.

Congress enacted two separate filing mandates to enforce this reporting chain. IRC 6031 requires every partnership to file Form 1065. IRC 6037 requires every S corporation to file Form 1120-S. The two statutes share a common architecture: a due date keyed to the 15th day of the 3rd month after year-end, a 6-month automatic extension via Form 7004, per-owner monthly penalties for late filing, and a shareholder or partner consistency obligation that backs the IRS's ability to make matching adjustments at the owner level.

This guide covers both statutes in depth, with attention to the Bipartisan Budget Act (BBA) centralized audit regime that makes the timely, accurate Form 1065 the procedural anchor for partnership-level examinations, the IRC 6037(b) shareholder consistency rule, penalty mechanics under IRC 6698 and IRC 6699, and first-time abatement pathways.

2. IRC 6031: Partnership Return Obligations (Form 1065)

Who Must File

IRC 6031(a) requires every partnership to file a return of income for each taxable year. The term "partnership" carries the same meaning as in IRC 761(a): any syndicate, group, pool, joint venture, or other unincorporated organization through which business, financial operations, or ventures are carried on, and which is not classified as a trust, estate, or corporation. For federal tax purposes, the entity's classification follows the check-the-box regulations under Reg. 301.7701-2 and 301.7701-3.

The filing obligation under IRC 6031 encompasses:

• Domestic partnerships (the core obligor under IRC 6031(a)), including general partnerships, limited partnerships, limited liability partnerships, and limited liability companies with two or more members that have not elected to be classified as corporations.
• Single-member LLCs that are treated as partnerships in certain tiered structures, where a disregarded entity sits within a partnership. The Form 1065 of the owner-partnership must reflect those items, though the disregarded entity itself does not file a separate Form 1065.
• Foreign partnerships under IRC 6031(e), discussed below in Section 5.
• Electing large partnerships (to the extent still applicable; the ELP regime was largely superseded by the BBA).

A partnership with no income, deductions, or credits for the year is still obligated to file if it had any activity or if partners exist. The instructions to Form 1065 confirm this: the return is required even for tax years of no activity if the partnership has not formally dissolved and reported that dissolution.

Form 1065 and Schedule K-1 Obligations

Form 1065 is the partnership's annual information return. It reports the partnership's income, deductions, gains, losses, and credits, identifies each partner, and allocates each item to partners via Schedule K-1 (Form 1065). The Schedule K-1 is the operative document that flows partnership-level items to the partners' own returns.

For practitioners drafting or reviewing the allocation of separately stated items on Form 1065 Schedule K-1, the detailed rules governing what must be separately stated (as opposed to netted into ordinary income) are addressed in the guide on IRC 702: Partnership Distributive Share and Separately Stated Items on Schedule K-1. The elections available at the partnership level that affect the computation of partnership taxable income are addressed in the guide on IRC 703: Partnership Taxable Income and Elections on Form 1065.

3. Due Dates and Extension Rules for Form 1065

Original Due Date

Under IRC 6072(b) as modified by the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 (effective for returns for tax years beginning after December 31, 2015), the due date for Form 1065 is the 15th day of the 3rd month after the close of the taxable year. For calendar-year partnerships, that date is March 15.

This earlier deadline relative to individual income tax returns (April 15) was intentional: partners need their Schedule K-1s before they can complete their own returns, and the March 15 deadline gives them time. Where a partnership has fiscal-year partners with their own April 15 or later deadlines, the timing benefit still generally flows through from the March 15 partnership deadline.

Extension via Form 7004

A partnership may obtain an automatic 6-month extension of time to file Form 1065 by timely filing Form 7004, Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns. For calendar-year partnerships, the extended deadline is September 15. The extension is automatic upon timely filing of Form 7004; no reason need be stated and no IRS approval is required.

Critical limitation: the extension is an extension of time to file, not an extension of time to pay. Partnerships that owe any entity-level tax (for example, a BBA imputed underpayment) must still pay that amount by the original due date to avoid interest and failure-to-pay penalties.

Short-Year Returns

If a partnership terminates, converts, or changes its tax year during the year, a short-period Form 1065 is required. The due date is still the 15th day of the 3rd month after the close of the short period. The partnership should file Form 7004 for any short-period return where it anticipates filing after that date.

4. BBA Centralized Audit Regime and Form 1065 as the Audit Anchor

Background

The Bipartisan Budget Act of 2015 (BBA, P.L. 114-74) replaced the former TEFRA partnership audit rules with a new centralized partnership audit regime, effective for partnership taxable years beginning after December 31, 2017. The BBA fundamentally changed where and how the IRS assesses and collects tax arising from partnership-level adjustments.

Under the prior TEFRA regime, the IRS examined partnership items at the partnership level but assessed and collected resulting tax from the partners. Under the BBA, by contrast, the IRS examines and adjusts partnership items at the partnership level, computes an "imputed underpayment" (IU) reflecting the tax impact of those adjustments, and assesses that IU directly against the partnership. The partnership itself becomes the collection point unless it exercises push-out rights under IRC 6226.

Form 1065 as the Procedural Anchor

The filed Form 1065 is the anchor document for BBA audit procedures. All adjustments in a BBA examination flow from items reported (or omitted) on the Form 1065. The partnership's "adjustment year" (the year in which BBA adjustments are assessed) is linked back to the "reviewed year" (the year of the Form 1065 under audit). This means:

• A late, incomplete, or inaccurate Form 1065 does not suspend the BBA audit period; it may, in fact, leave the statute of limitations open longer because the return is considered not validly filed.
• The partnership representative (PR) designated on the Form 1065 has exclusive authority to act for the partnership in BBA audit proceedings. An absent or invalid PR designation on the Form 1065 creates procedural exposure.
• Election-out of the BBA regime (available to small partnerships meeting the criteria under IRC 6221(b)) must be made on a timely filed Form 1065, including extensions. A late-filed return cannot make a retroactive election-out.

Push-Out Election Under IRC 6226

A partnership that does not elect out of the BBA regime may still avoid entity-level payment of the imputed underpayment by making a push-out election under IRC 6226. The push-out causes the IRS to issue revised Schedule K-1s to the reviewed-year partners, who then bear the tax, interest, and penalties attributable to the adjustments on their own returns. The push-out election is time-sensitive and must be made within 45 days of the date the notice of final partnership adjustment (FPA) is mailed.

5. Foreign Partnership Filing Under IRC 6031(e)

IRC 6031(e) extends the Form 1065 filing obligation to foreign partnerships, but with a narrower scope than the obligation imposed on domestic partnerships. A foreign partnership must file Form 1065 only if it has:

• Gross income that is effectively connected with the conduct of a trade or business within the United States, or
• Gross income derived from sources within the United States (U.S.-source income), and the foreign partnership has at least one U.S. person as a direct or indirect partner who must report the income on a U.S. return.

Treasury regulations under IRC 6031 (Reg. 1.6031(a)-1) provide additional guidance and carve-outs. Foreign partnerships that would otherwise file may be excepted under certain de minimis rules or if all required information is otherwise reported by U.S. partners.

Intersection with Form 8865: U.S. persons who are partners in a controlled foreign partnership (50% or more ownership) are separately required to file Form 8865, Return of U.S. Persons With Respect to Certain Foreign Partnerships. The Form 8865 obligation runs to the U.S. partner, not the foreign partnership itself. Practitioners advising on foreign partnership structures should address both the IRC 6031(e) entity-level obligation and the Form 8865 partner-level obligation as distinct compliance tracks.

6. IRC 6037: S Corporation Return Obligations (Form 1120-S)

Who Must File

IRC 6037(a) requires every S corporation to file a return of income for each taxable year. An S corporation is a corporation for which an election under IRC 1362(a) is in effect. That election transforms what would otherwise be a C corporation into a pass-through entity whose items of income, loss, deduction, and credit are passed through to shareholders on a per-share, per-day basis under IRC 1366.

The Form 1120-S filing obligation arises for:

• All active S corporations with income, deductions, or credits during the year.
• Inactive S corporations with the S election still in effect, even if no transactions occurred. The return must be filed to preserve the S election and avoid penalty accrual.
• S corporations in their final year, including a short-period Form 1120-S for the S-period ending on the date of revocation or termination of the S election under IRC 1362(d).

The validity of the S election underlying the Form 1120-S obligation is governed by IRC 1362, including the rules for valid elections, revocations, and terminations. The guide on IRC 1362: S Corporation Election, Revocation, Termination, and Inadvertent Termination Relief covers those rules in detail.

Form 1120-S and Schedule K-1 Obligations

Form 1120-S is the S corporation's annual income tax return and information return. It reports the corporation's items of income, deduction, gain, loss, and credit, and distributes those items to shareholders via Schedule K-1 (Form 1120-S). As with the partnership K-1, the S corporation Schedule K-1 is the operative instrument through which the pass-through items reach the shareholders.

The rules governing how S corporation items flow through to shareholders and how basis adjustments are computed under IRC 1367 are addressed in the guide on IRC 1366 and 1367: S-Corp Income Passthrough, Basis Adjustment, and Separately Stated Items.

7. Due Dates and Extension Rules for Form 1120-S

Original Due Date

Like Form 1065, Form 1120-S is due by the 15th day of the 3rd month after the close of the taxable year. For calendar-year S corporations, the original due date is March 15. This date was also set by the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, effective for returns for tax years beginning after December 31, 2015, moving S corporation returns from the prior April 15 deadline to the current March 15.

The March 15 deadline for S corporations aligns with the partnership deadline and reflects the same policy rationale: shareholders need Schedule K-1 data to complete their personal returns, and the earlier S corporation deadline is designed to allow that flow.

Extension via Form 7004

An S corporation may obtain an automatic 6-month extension of time to file Form 1120-S by timely filing Form 7004. For calendar-year S corporations, the extended deadline is September 15. As with Form 1065 extensions, the Form 7004 extension for Form 1120-S is automatic, requires no IRS approval, and extends only the filing deadline, not any payment obligation.

8. Consistency Requirement Under IRC 6037(b)

IRC 6037(b) imposes a shareholder consistency requirement. A shareholder of an S corporation must treat each S corporation item in the same manner on their individual return as the S corporation treated that item on Form 1120-S. This consistency obligation mirrors (but is not identical to) the partner consistency requirement that applied under the former TEFRA regime and continues in a modified form under the BBA.

Reporting Inconsistencies and Form 8082

If a shareholder wishes to report an S corporation item inconsistently with the corporation's treatment on Form 1120-S (for example, because the shareholder believes the S corporation's treatment was incorrect), the shareholder must notify the IRS by filing Form 8082, Notice of Inconsistent Treatment or Administrative Adjustment Request. Failure to file Form 8082 when treating an item inconsistently allows the IRS to assess a deficiency against the shareholder to conform the shareholder's return to the S corporation's treatment, without the normal deficiency notice and Tax Court petition rights.

Practical Significance

The IRC 6037(b) consistency requirement is most commonly triggered in the following situations:

• A shareholder claims a loss or deduction in an amount different from what appears on their Schedule K-1 from the S corporation.
• A shareholder reclassifies the character of an item (for example, treating ordinary income from the S corporation as capital gain).
• A shareholder excludes income that the S corporation reported on its Form 1120-S as allocable to that shareholder.

In any of these situations, a timely Form 8082 preserves the shareholder's rights. Without it, the IRS's adjustment is summary and non-deficiency in procedure, meaning the shareholder cannot contest it through the Tax Court petition process.

9. Penalties: IRC 6698 (Partnerships) and IRC 6699 (S Corporations)

IRC 6698: Partnership Failure-to-File Penalty

IRC 6698 imposes a monthly penalty for any month (or fraction of a month) during which a required Form 1065 is not filed, up to a maximum of 12 months. The penalty is computed on a per-partner, per-month basis. The base statutory amount has been subject to inflation adjustment under IRS Rev. Proc. procedures issued annually; for 2026, practitioners should verify the current per-partner per-month figure against the applicable IRS Rev. Proc. inflation adjustment table before advising clients, as the amount has increased from the original statutory base and continues to be adjusted. As a reference point, the IRS has historically published updated penalty amounts in annual Rev. Procs. (such as Rev. Proc. 2023-34 for the 2024 figures) and in Publication 3, so practitioners should pull the most current guidance.

The late-filing penalty mechanics, maximum accrual periods, and practical exposure calculations for large multi-partner funds are addressed in detail in the guide on IRC 6698 and 6699: Partnership and S-Corp Failure-to-File Penalties.

IRC 6699: S Corporation Failure-to-File Penalty

IRC 6699 mirrors the structure of IRC 6698 for S corporations. The penalty applies for each month (or fraction of a month) that Form 1120-S is not filed after the due date (including extensions), up to a maximum of 12 months. The penalty amount is computed per shareholder per month, using the same inflation-adjusted per-unit rate as the partnership penalty under IRC 6698. The number of shareholders for penalty computation purposes is the number of persons who were shareholders at any point during the taxable year, not only at year-end.

10. First-Time Abatement and Reasonable Cause

First-Time Abatement

The IRS's First-Time Penalty Abatement (FTA) policy is an administrative waiver (not a statutory right) that allows the IRS to remove certain penalties for taxpayers with a clean compliance history. FTA is available for the IRC 6698 and IRC 6699 penalties when:

• The entity did not have the same penalty imposed for any of the three prior tax years.
• The entity is current on all required filings at the time of the FTA request.
• The entity has paid, or arranged to pay, any outstanding tax, interest, or other amounts owed.

FTA requests can be made by phone (calling the IRS Business and Specialty Tax line and requesting abatement) or by written request (typically using Form 843, Claim for Refund and Request for Abatement, or a formal letter to the IRS Service Center that assessed the penalty). Oral requests are often the fastest path, as agents can grant FTA in a single call for qualifying entities.

Reasonable Cause Abatement

Where FTA is not available (for example, because the entity has a prior-year penalty on record), IRC 6698 and IRC 6699 penalties may still be abated on a showing of reasonable cause and absence of willful neglect. Reasonable cause is assessed under a facts-and-circumstances standard. Circumstances courts and the IRS have found to support reasonable cause in the filing-penalty context include:

• Death, serious illness, or unavoidable absence of the person responsible for filing.
• Unavailability of books and records due to a fire, casualty, or other disaster.
• Reliance on the erroneous advice of a tax professional, where the reliance was reasonable.
• Failure of the IRS to provide information or forms required to file, where the taxpayer made timely inquiry.

Reasonable cause is not established merely by citing workload, delayed receipt of information from partners or shareholders, or complexity of the return. The entity must demonstrate that it exercised ordinary business care and prudence in attempting to meet its obligations and that the failure occurred despite that care.

11. Side-by-Side Comparison: Form 1065 vs. Form 1120-S

Key Due Dates at a Glance

12. Frequently Asked Questions