Here’s what HIVE AI had to say about “How to calculate late filing penalties for partnerships?”:

Calculating Late Filing Penalties for Partnerships (Form 1065)

What triggers the penalty

• A partnership owes a penalty if it files Form 1065 late (after the due date, including extensions) or files an incomplete return lacking required information, unless it establishes reasonable cause. 1

The formula

• Penalty per month = base penalty rate × number of partners
• Total penalty = penalty per month × number of months late (or part of a month), up to 12 months
• “Number of partners” means the total persons who were partners at any time during the tax year for which the return is due. 2

Current base penalty rate

• For returns with an original due date after 12/31/2024: $245 per partner per month (max 12 months). 3

Example calculation

• Facts: Calendar-year partnership, 8 partners during the year, 2024 Form 1065 due March 17, 2025. Filed July 2, 2025 without extension.
• Months late: March 18–March 31 (part month) = 1; April = 1; May = 1; June = 1; July 1–2 (part month) = 1 → 5 months.
• Penalty: $245 × 8 partners × 5 months = $9,800. 3

Separate penalties you may also face

Late or incorrect Schedules K-1/K-3 to partners

• $330 per Schedule K-1/K-3 failure (intentional disregard doubles to $660 or 10% of items), with annual caps that vary by gross receipts. 1

Required e-filing not done (over 100 partners)

• Penalties can apply for failing to e-file when required; Schedules K-1/K-3 may be treated as separate information returns for section 6721 penalty computations. 4

International-related forms attached to 1065

• Form 8865 (foreign partnerships): $10,000 initial penalty per required form, with continuation penalties after 90 days; potential foreign tax credit reductions. 5
• Form 5471 attached to 1065 (if applicable to a partner entity): similar $10,000 initial and continuation penalties per form. 6

Section 1446 withholding (Forms 8804/8805)

• Late filing of Form 8804: 5% per month of unpaid tax, up to 25%; 60+ days late minimum penalty $450 or tax due, whichever is smaller. 7

Reasonable cause and small partnership relief

• The late filing penalty under section 6698 can be abated for reasonable cause; do not attach explanations to the return—respond to the IRS notice with your facts. 1
• Presumptive penalty relief for certain “small partnerships” (Rev. Proc. 84-35 criteria): generally 10 or fewer partners, all individuals (not NRAs) or estates, identical pro-rata allocations, and each partner timely reported their share. 3

Administrative mechanics the IRS uses

• The IRS computes the penalty as base rate × partners × months/partial months, up to 12, and assesses with Transaction Codes PRN 722 (late filing) and PRN 723 (missing/incomplete information). If the number of partners used is wrong, it can be adjusted. 8

Legal grounding

• By statute, the penalty is imposed on the partnership and is computed per month based on the number of partners; inflation has raised the operational amount used by the IRS from the $195 statutory base in the Code to current published rates. 9 10 11

Practical tips to reduce or avoid penalties

• File Form 7004 by the original due date to get an automatic 6‑month extension and avoid late filing penalties as long as you file by the extended date. 12
• If you receive a penalty notice, verify the partner count and months used; request abatement for reasonable cause or small partnership relief where applicable. 2

If you share your tax year, number of partners, original due date, and actual filing date, I can compute your penalty precisely and check for relief options.

Sources

1 – IRS.gov – Instructions for Form 1065 (2024) 📄 Summarize
2 – IRS IRM 20.1.2 Failure To File/Failure To Pay Penalties 📄 Summarize
3 – IRS.gov – Failure to file penalty 📄 Summarize
4 – Treasury Regulation 301.6721-1 📄 Summarize
5 – IRS.gov – Instructions for Form 8865 (2024) 📄 Summarize
6 – IRS IRM 20.1.9 International Penalties 📄 Summarize
7 – IRS.gov – Instructions for Forms 8804, 8805, and 8813 (11/2022) 📄 Summarize
8 – IRS IRM 21.7.4 Income Taxes/Information Returns 📄 Summarize
9 – IRC § 6698(c) 📄 Summarize
10 – IRC § 6698(b) 📄 Summarize
11 – IRS – Notice 746 Information About Your Notice, Penalty and Interest 📄 Summarize
12 – IRS – Instruction 7004 Instructions for Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns 📄 Summarize

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