§6233 — Title 26 Internal Revenue Code | U.S. Code

Summary

When the IRS audits a partnership and adjusts a past year's return, the partnership itself owes interest and penalties on the resulting underpayment. Interest runs from the day after the return was due for the audited year until the return due date for the year the adjustment is made, or until the partnership pays, if sooner. Penalties are figured as if the partnership were an individual taxpayer and the imputed underpayment were a real underpayment. If the partnership then fails to pay the imputed underpayment on time, it owes more: interest on the unpaid amount plus a failure-to-pay penalty, treating the amount like unpaid tax for the adjustment year. The partnership can make a deposit to stop interest from building on a potential underpayment. These rules apply to partnership tax years beginning after December 31, 2017.

Title 26, §6233

Internal Revenue Code — Source: USLM XML via OLRC

(a)(1)Except to the extent provided in section 6226(c), in the case of a partnership adjustment for a reviewed year—

(A)interest shall be computed under paragraph (2), and

(B)the partnership shall be liable for any penalty, addition to tax, or additional amount as provided in paragraph (3).

(2)The interest computed under this paragraph with respect to any partnership adjustment is the interest which would be determined under chapter 67 for the period beginning on the day after the return due date for the reviewed year and ending on the return due date for the adjustment year (or, if earlier, the date payment of the imputed underpayment is made). Proper adjustments in the amount determined under the preceding sentence shall be made for adjustments required for partnership taxable years after the reviewed year and before the adjustment year by reason of such partnership adjustment.

(3)Any penalty, addition to tax, or additional amount shall be determined at the partnership level as if such partnership had been an individual subject to tax under chapter 1 for the reviewed year and the imputed underpayment were an actual underpayment (or understatement) for such year.

(b)(1)In the case of any failure to pay an imputed underpayment on the date prescribed therefor, the partnership shall be liable—

(A)for interest as determined under paragraph (2), and

(B)for any penalty, addition to tax, or additional amount as determined under paragraph (3).

(2)Interest determined under this paragraph is the interest that would be determined by treating the imputed underpayment as an underpayment of tax imposed in the adjustment year.

(3)Penalties, additions to tax, or additional amounts determined under this paragraph are the penalties, additions to tax, or additional amounts that would be determined—

(A)by applying section 6651(a)(2) to such failure to pay, and

(B)by treating the imputed underpayment as an underpayment of tax for purposes of part II of subchapter A of chapter 68.

(c)For rules allowing deposits to suspend running of interest on potential underpayments, see section 6603.

Notes & Related Subsidiaries

Editorial Notes

Prior Provisions

A prior section 6233, added Pub. L. 98–369, div. A, title VII, § 714(p)(1), July 18, 1984, 98 Stat. 964; amended Pub. L. 104–188, title I, § 1307(c)(3)(B), Aug. 20, 1996, 110 Stat. 1782, related to extension to entities filing partnership returns, prior to repeal by Pub. L. 114–74, title XI, § 1101(a), Nov. 2, 2015, 129 Stat. 625.

Amendments

2018—Subsec. (c). Pub. L. 115–141 added subsec. (c).

Statutory Notes and Related Subsidiaries

Effective Date

of 2018 AmendmentAmendment by Pub. L. 115–141 effective as if included in section 1101 of Pub. L. 114–74, see section 207 of Pub. L. 115–141, set out as a note under section 6031 of this title.

Effective Date

Section applicable to returns filed for partnership taxable years beginning after Dec. 31, 2017, with certain exceptions, see section 1101(g) of Pub. L. 114–74, set out as a note under section 6221 of this title.

§6233 Interest and Penalties

Summary

Title 26, §6233

Notes & Related Subsidiaries

Editorial Notes

Prior Provisions

Amendments

Statutory Notes and Related Subsidiaries

Effective Date

Effective Date

Citations & Metadata