In late 2021, the IRS announced that it would not begin accepting Schedules K-2 and K-3 until end of March 2022 at the earliest. Since this timeframe is after the March 15 due date for 2021 Forms 1065, the IRS indicated that any partnerships needing to file these schedules should plan to request an extension of time to file.

Fortunately, the IRS is focusing on partnerships first (before S corporations and individual filers with Schedules K-2 and K-3). As such, it is anticipated that partnerships will be able to start e-filing their Forms 1065 that contain Schedules K-2 and K-3 as early as April 2022.

Although the official timeframe for e-filing Schedules K-2 and K-3 is late March/early April, the IRS has provided a workaround to allow partnerships to e-file by the March 15 due date. Partnerships can e-file by March 15 if Schedules K-2 and K-3 are included as an attachment to the return (rather than as forms within the return). This method is not typically allowed for e-filing of mandatory tax forms and schedules. In this case, however, the IRS has made a temporary exception.

One caveat: as of February 2022, the IRS was still updating its guidance and filing instructions for the Schedules K-2 and K-3. Also, partnerships and tax practitioners were still seeking additional guidance from the IRS on completion of these forms. Given the ongoing changes and updates, it’s unclear if all details will be sorted by March 15, and some partnerships may benefit from delaying their filings.