The IRS issued 2 new forms last year that add lots of bulk, but not much data to tax returns. Corporations and Partnerships much attach Form K-2 (14 pages) to all entity level returns, and partners and shareholders must attach Form K-3 (20 pages) to their tax returns.
These forms report foreign activity to the IRS. If a company has foreign activities, the forms are necessary to report the information to the IRS and if the companies have no active foreign business or limited passive activity, the forms still need to be filed, but with little activity reported. In other words, regardless of foreign activity the forms still need to be filed.
Needless to say, my CPA colleagues were not very happy with this ruling, and we lobbied for some relief.
The IRS ruled that if certain conditions were met, the forms do not need to be filed.
I have written 2 letters, one for partnerships and one for S Corps. Please read the appropriate letters and complete the waiver (if applicable) for each entity for which we prepare a return. Please sign and date and list the entities and return the form to us.
PLEASE NOTE: If we don't receive the form back from you or you indicate that you don't meet the exceptions, we will need to complete Forms K-2 for every entity and K-3 for every partner/shareholder. AND there will additional fees associated with preparing these Forms.
So, please read the appropriate letter and complete the form and return it to us as soon as possible.