Insights & News

IRS Releases FAQs on Schedules K-2 and K-3

February 24, 2022

IRS Releases FAQs on Schedules K-2 and K-3
The IRS has announced additional details on transition relief for certain domestic partnerships and S corporations preparing new schedules K-2 and K-3. New schedules K-2 and K-3 improve reporting by standardizing international tax information to partners and flow-through investors and ease flow-through return preparation compliance by clarifying obligations and standardizing the format for reporting. The transition relief was released as part of frequently asked questions (FAQs) on new Schedules K-2 and K-3, which expands upon the original penalty relief provided for in Notice 2021-39.

IRS Updates Voluntary Disclosure Form
The IRS has announced that it has updated Form 14457, Voluntary Disclosure Practice Preclearance Request and Application. The Form now includes a section on reporting virtual currency.

TIGTA Releases Audit Report on QOZ Fund and Investor Noncompliance
The Treasury Inspector General for Tax Administration (TIGTA) has released an audit report titled “Additional Actions Are Needed to Address Qualified Opportunity Zone Fund and Investor Noncompliance.” Qualified opportunity zone (QOZ) funds, added as part of the 2017 Tax Cuts and Jobs Acts, allow investors to defer certain gains when invested in the funds. The report outlines eight recommendations for the IRS to improve compliance with the program, of which the IRS agreed with six. Some of the recommendations include developing processes to decertify funds that intentionally do not comply with the requirements and to identify and address inaccurate and incomplete investor reporting.

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