The 2023 version of Form 8308, Report of a Sale or Exchange of Certain Partnership Interests, requires information to be reported contingent upon the finalization of substantially all of a partnership’s tax return by January 31, months in advance of the due dates for Form 1065 and related Schedules K-1. These new filing requirements place an undue burden on taxpayers and tax practitioners by mandating the duplicate reporting of information already required to be reported on Schedules K-1.

The American Institute of CPAs (AICPA) is urging the Department of the Treasury and the Internal Revenue Service (IRS) to simplify the onerous new filing requirements mandated by the revised version of the Form 8308, noting that the January 31 deadline for this reporting requirement makes it more difficult for taxpayers and tax practitioners to calculate, prepare and file in a timely manner.

The AICPA’s recommendations include the following:

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1. Synchronization of Form 8308 and Schedules K-1 delivery dates

Currently, partnerships must furnish Form 8308 to partners by January 31^st. Form 8308, which includes computations of a selling partner’s share of section 751(a) items, is filed with Form 1065 and related Schedules K-1. However, partnerships must furnish Form 8308 to partners by January 31^st which is well before the due dates of Form 1065 and Schedules K-1. Calculations for section 751 are unlikely to be finalized, or even exist, by January 31^st. Therefore, it makes producing Form 8308 burdensome, if not impossible.

2. Removal of duplicate information between Form 8308 and Schedule K-1

Recent updates to Schedules K-1 result in unnecessary duplication of information required to be reported on both Schedules K-1 and current Form 8308. Specifically, the selling partner’s share of ordinary income, collectibles gain, and unrecaptured section 1250 gain is already required to be included on such partner’s Schedule K-1. The additional reporting of this information on current Form 8308 provides little or no benefit, increasing the reporting burden on taxpayers.

3. Authorize composite filing methodology

Although regulations specifically allow for use of substitute statements when providing information to partners, partnerships may be required to file numerous Forms 8308 with the IRS. The AICPA recommends that the IRS update the instructions to Form 8308 to authorize and specifically outline requirements for a composite document to be filed with the IRS when 25 or more such returns are required to be filed in any calendar year. Authorizing this filing method will decrease the reporting burden for taxpayers and the IRS.

“The AICPA’s recommendations would ease the administrative burden on our members by synchronizing the Form 8308 filing with the due dates for Schedules K-1, revising the forms to remove items already required for other filings and updating the instructions to Form 8308 to authorize and specifically outline requirements for a composite filing methodology,” said Kristin Esposito, Director, AICPA Tax Policy & Advocacy. “We believe these changes will improve compliance and we urge the IRS to consider their implementation.”