This Return Filing Includes a Schedule K-1; I Don't Have It, My Client Can Not Obtain It, What Should I Do?

William Delaney, EA
Westwood, MA

A paid preparer signs a jurat (that little statement opposite Sign Here) along with the taxpayer(s) which says (in part) “Declaration of the preparer…is based on all information of which the preparer has any knowledge.”  Some of us think that this is the only part which holds us to a standard.   But, we sign the entire jurat which also says…”true, correct, and complete.”  We are only off the hook if we don’t know about it, but we do know that the K-1 is missing and we are faced with that extended due date filing deadline, the Dr. Silber defense (see below) notwithstanding.

You can file a return with incomplete information, so long as you disclose this to the IRS.  No, I don’t want to file an 8275-R – Regulation Disclosure Statement!   They will audit my client!  And, your Editor is in agreement---you don’t want to attach that form; it is only used for disclosing a position which is inconsistent with treasury regulations.  What to do…

Use form 8275 (without the R).  Explain what you are doing (Part II) and reference the pass-through entity (Part III).  Then, let the IRS chase the entity for you!

What is the Dr. Silber defense?  If you are old enough, you will remember the 1990 MA state election for governor.  William Weld (Republican) v. John R. Silber (Democrat).  During the campaign, Dr. Silber (then President of Boston University) was asked when he planned to make public his income tax return.  To which he replied, it’s on extension (i.e. incomplete).  After October 15th, the press asked again, and Dr. Silber replied that his accountant had obtained another extension because he was missing a K-1.

The pesky press were not satisfied, so they interviewed a spokesperson for the IRS Boston office who explained that no extension is possible after October 15th except for someone who is still out of the country.  Dr. Silber was insistent---he had an extension. Of course, since he lost the election to his opponent, we never did see his tax return.