Signature Tax Event 2022 Deck FINAL | Page 79

Penalty Relief

• Notice 2021-39 , 2021-27 IRB 12 provides transition relief , provided “ good faith effort ” is made to comply with the filing requirements .

• Good Faith Effort is defined as :

Company made changes to its systems , process , and procedures to collection and processing information relevant to filing K-2 and K-3
Company made reasonable assumptions when information was not obtained
Steps taken by company to modify partnership or S corporation agreement to facilitate sharing of info to determine if K-2 and K-3 was necessary
IRS will consider effort made , reasonableness of assumptions and size of partner ( less than 10 %) for information that was not obtained .

• Keep in mind this relief is only for 2021 filings .