§6233 Interest and Penalties

Summary

When a partnership’s tax return for a reviewed year is changed, the partnership must pay interest and may owe penalties on the amount the IRS treats as owed because of that change (the "imputed underpayment"), except as limited by section 6226(c). Interest runs from the day after the original return due date for the reviewed year until the return due date for the adjustment year, or until the imputed underpayment is paid. The interest amount is worked out under the same rules used for other tax interest, and it is adjusted if the partnership’s tax years between the reviewed year and the adjustment year are affected. If the partnership does not pay the imputed underpayment when it is due, it owes interest as if the imputed amount were an underpayment in the adjustment year. The partnership may also owe penalties and additions to tax. Those penalties are figured at the partnership level as if the partnership were an individual taxed under chapter 1 for the reviewed year, and by applying the rules in section 6651(a)(2) and the rules in part II of subchapter A of chapter 68. Rules allowing deposits to stop interest from running are under section 6603.