 into our revenue service IRS tax news IRS provides further details on additional relief for certain partnerships preparing schedules K-2 and K-3 for 2021 IR 2022-38 February 16 2022 Washington the IRS today provided further details on additional transition relief for certain domestic partnerships and S corporations preparing new schedules K-2 and K-3 to further ease the change to their new schedules those eligible for the relief will not have to file the new schedules for tax year 2021 the new schedules K-2 and K-3 improve reporting by standardizing international tax information to partners and flow through investors making it easier for them to report these items on their tax returns in addition the changes ease flow through return preparation compliance by clarifying obligations and standardizing the format for reporting notice 2021-39 there's a link to that notice here provides penalty relief for good faith efforts to adopt the new schedules today's transition relief appearing in new frequently asked questions the FAQs on schedule K-2 and K-3 there's a link to that here allows an additional exception for tax year 2021 filing requirements by certain domestic partnerships and S corporations the IRS is providing an additional exception for tax year 2021 to filing the schedule K-2 and K-3 for certain domestic partnerships and S corporations to qualify for this exception the following must be met and tax year 2021 the direct partners in the domestic partnership are not foreign partnerships foreign corporations foreign individuals foreign estates or foreign trusts in tax year 2021 the domestic partnership or S corporation has no foreign activity including foreign taxes paid or accrued or ownership of assets that generate have generated or may reasonably expect to generate foreign source income C section 1.861-9 G3 in tax year 2020 the domestic partnership or S corporation did not provide to its partnership or shareholders nor did the partners or shareholders request the information regarded on the form or attached there to line 16 form 1065 schedule K and K-1 line 14 form 1120 S and line 20 C form 1065 schedule K and K-1 controlled foreign corporations passive foreign investment companies 1120-F section 250 section 864 C 8 section 721 C partnerships and section 7874 line 17D for form 1120 S the domestic partnership or S corporation has not has no knowledge that the partners or shareholders are requesting such information for tax year 2021 if a partnership or S corporation qualifies for this exception the domestic partnership or S corporation does not need to file schedule K-2 and K-3 with the IRS or with its partners or shareholders however if the partnership or S corporation is subsequently notified by a partner or shareholder that all or part of the information contained on schedule K-3 is needed to complete their tax return then the partnership or S corporation must provide the information to the partner or shareholder if a partner or shareholder notifies the partnership or S corporation before the partnership or S corporation files its return the conditions for the exception are not met and the partnership or S corporation must provide the schedule K-3 to the partner or shareholder file the schedule K-2 and K-3 with the IRS so it's just it's clear as it's clear as can be I'm sure to everybody here if you want to look at that in more detail we will have links to this in the description and you can you could get you could dive into the details if you think this is going to be applicable to your S corporation and what not and and so you could start your research here last line here the IRS welcomes additional comments on schedule K-2 and K-3 this feedback and inquiries can be sent to you and there's a area you could send to the email address so again if you're if this is applicable to you you're probably going to need to dive down a little bit more and check into it and see see what's going on with it if it's going to be applicable to you and there'll be a link to this in the description