Friday, May 10, 2013

IRS Makes Changes to Schedule M-3 Filing Requirement for 2014

;
The IRS will be making changes to the Schedule M-3 filing requirement for taxpayers with assets between $10M-$50M for Forms 1120, 1120-C, 1120-F, 1120S, 1065 and 1065-B. These taxpayers will be permitted to file Schedule M-1 in place of the Schedule M-3 Parts II and III.  These changes will be effective for tax years ending on December 31, 2014, and later. No changes are currently planned to the Schedule M-3 requirements for Forms 1120-L, or 1120-PC, nor for Form 1120 taxpayers filing as a mixed group.
 
Notice of Change in Schedule M-3 requirements for corporations and partnerships with $10 million to $50 million in total assets permitting the filing of Schedule M-1 in place of Schedule M-3, Parts II and III, effective for tax years ending December 31, 2014 and later:
Effective for tax years ending December 31, 2014 and later, corporations and partnerships with at least $10 million but less than $50 million in total assets at tax year end will be permitted to file Schedule M-1 in place of Schedule M-3, Parts II and III. Schedule M-3, Part I, lines 1-12 will continue to be required for these taxpayers.  Those taxpayers electing to file Schedule M-1 must report book income on Schedule M-1, line 1, equal to the book income amount reported on Schedule M-3, Part I, line 11.  Corporations and partnerships with $10 million to $50 million in total assets may voluntarily file Schedule M-3 Parts II and III rather than Schedule M-1.  This change applies to corporations and partnerships filing Forms 1120, 1120-C, 1120-F, 1120S, 1065 and 1065B.
Corporations and partnerships filing Forms 1120, 1120-C, 1120-F, 1120S, 1065 and 1065B with $10 million to $50 million in total assets will not be required to file Form 1120 Schedule B, Form 1065 Schedule C or Form 8916-A.
The reason for these changes is to reduce filing burden and to simplify reporting for these corporations and partnerships.  
LB&I continues to consider changes to Schedule M-3 and to the requirements for the book-to-tax reconciliation for corporations with $10 million to $50 million in total assets filing Form 1120-L, 1120-PC, or filing as a mixed group including the requirement that mixed groups sub-consolidate and file Form 8916.
Schedule M-1 detail is currently filed electronically as four attachments, one each to Schedule M-1 lines 4, 5, 7, and 8.  This will not change.
Partnerships with less than $10 million in total assets currently required to file Schedule M-3 (adjusted total assets of $10 million or more, total receipts for $35 million or more, or a reportable entity partner also required to file Schedule M-3) will continue to file Schedule M-3, Part I and may elect to file Schedule M-1 in place of Schedule M-3, Parts II and III.  Partnerships with less than $10 million in assets will not be required to file Form 1065 Schedule C or Form 8916-A.
Corporations and partnerships with less than $10 million in total assets not otherwise required to file Schedule M-3 are currently permitted to voluntarily file Schedule M-3. Such taxpayers may continue to voluntarily file Schedule M-3 and may elect to file Schedule M-3 Parts I, II, and III or to file Schedule M-3 Part I and to file Schedule M-1 in place of Schedule M-3 Parts II and III. Such corporations and partnerships will not be required to file Form 1120 Schedule B, Form 1065 Schedule C, or Form 8916-A.
LB&I continues to consider changes to Schedule M-3 and to the requirements for the book-to-tax reconciliation for corporations and partnerships with $50 million or more in total assets.