Overview
A partnership is formed when two or more individuals or organizations decide to go into business together.
Partners in a partnership can be:
- Individuals
- Other businesses and organizations such as corporations and trusts.
A partnership is not directly subject to income tax. Instead, each partner is taxed on their share of the partnership income, whether distributed or not.
Filing Requirements and Due Dates
Returns are due annually by the 15th day of the third month after the close of the partnership's taxable year, calendar, or fiscal. See Technical Information Release (TIR) 17-5.
A partnership that is filing in Massachusetts must:
- Issue Schedules 3K-1 to individual partners and
- Submit Schedules 3K-1 copies to the MA DOR with Form 3.
A partnership that is filing federally must:
- File Form 1065 or
- 1065B & Schedules K-1.
To learn more about filing requirements, see:
Form 3
A partnership must annually file a Form 3, Partnership Return, to report the partnership's income to the MA DOR if:
- It has a usual place of business in Massachusetts, or
- Receives federal gross income of more than $100 during the taxable year.
Note: Although no tax payments are made with Form 3, the partnership is subject to penalties for failure to file or late filing of this return.
For detailed information on Form 3 or Schedule 3K-1 see Form 3 Instructions. For additional details on federal filing obligations, visit the IRS.
A partnership is not required to file a Form 3 if the partnership is not:
- Engaged in any business or income-producing activity and
- Required to file a federal Form 1065 or 1065B for that reason
However, the income of such a partnership must be taken into account by the partners on their Massachusetts personal income tax returns.
Schedule 3K-1
A partnership is required to file annually and:
- Issue a Schedule 3K-1 to each partner and
- Send a copy to the MA DOR.
The following table shows which return each type of partner should use to report Schedule 3K-1 income:
| Type of partner | Form to file |
|---|---|
| Full-year resident individual | Form 1 |
| Nonresident/part-year resident individual | Form 1-NR/PY |
| Trust or estate | Form 2 |
| Domestic or foreign corporation | Form 355 |
| Domestic or foreign corporation (part of a MA combined group) | Form 355C |
| Domestic or foreign S corporation | Form 355S |
| Corporate trust | Form 3F |
Additional Resources
- See the Form 3 Instructions to learn more about Form 3 or Schedule 3K-1.
- Visit the IRS to learn more about federal filing obligations.
Report Centralized Federal Partnership Audit (CFPA)
A partnership is required to report CFPA if:
- A partnership has been audited by the IRS under the partnership-pays provisions of the Bipartisan Budget Act of 2015. (Effective for tax years 2018 and following.)
- A “final determination” has been made by the IRS resulting in a change to partnership items as originally reported on Form 1065.
- Those changes affect the MA-taxable income of any partner.
See TIR 22-1: Reporting Rules Related to Centralized Federal Partnership Audits
Report CFPA on MassTaxConnect
To report CFPA, follow these steps on MassTaxConnect:
- Access the partnership’s Partnership Income Tax account.
- Select View Returns to see a list of periods for which a partnership submission is available.
- Select Report CFPA for the applicable period and
- Enter the information necessary to meet the requirements of TIR 22-1.
Federal and State Adjustments
A partnership must disclose:
- Its partner list and
- Any federal and state adjustments made as a result of the federal audit.
A partnership must also provide federal forms, including:
- Federal Form 8980, Partnership Request for Modification
- Federal Form 8982, Affidavit for Partner Modification
- Federal Form 8985, Pass-Through Statement
- Federal Form 8986, Partner(s) Share of Adjustment(s) to Partnership-Related Items
- Any other Federal Form or additional information documenting CFPA report
Paying Massachusetts taxes due related to the Federal Partnership Audit
A partnership will be able to pay Massachusetts taxes due by:
- Passing through adjustments to partners and having its partners file amended returns or
- Making an irrevocable election to pay under G.L. c 62C, § 30B(e).
Amended composite and PTE withholding returns
A partnership will be able to pay Massachusetts taxes due by filing amended returns on:
- Composite returns and
- PTE withholding returns.
The CFPA Report will request information regarding any amended composite returns and PTE withholding returns.
Contact for Partnerships
Phone
9 a.m.–4 p.m., Monday through Friday