Signing partnerships’ returns and other tax documents

Editor: Robert Venables, CPA, J.D., LL.M.

The signing of a tax return or other document may seem like a mundane task, and not much thought may go into who is the appropriate person to be signing a particular document. A recent Chief Counsel Advice memorandum (CCA), however, serves as a reminder of the importance of ensuring the proper person is signing partnership returns and other tax documents filed with the IRS. Different areas of the Code address who has authority to sign or act on behalf of a partnership. These sections highlight that a person authorized to sign a particular document may not be authorized to sign all documents or in all situations.

Signing a partnership return

Sec. 6031(a) provides a partnership shall “make a return for each taxable year,” and Sec. 6063 specifies that this return “shall be signed by any one of the partners.” Regs. Sec. 1.6063–1(b) adds, “A partner’s signature on a return, statement, or other document made by or for a partnership of which he is a member shall be prima facie evidence that such partner is authorized to sign such return, statement, or other document.” This seems straightforward; however, it gets more nuanced.

While the instructions to Form 1065, U.S. Return of Partnership Income, state the general rule that the return must be signed by a partner or limited liability company (LLC) member, the instructions also address who should sign a partnership return in certain circumstances: “When a return is made for a partnership by a receiver, trustee, or assignee, the fiduciary must sign the return, instead of the partner or LLC member.” A more common example is if the partner is not an individual but an entity. In this situation, the instructions state that “an individual who is authorized under state law to act for the entity partner must sign the partnership return.” The rationale in this situation is outlined nicely in CCA 201945027:

Generally, authority to sign a tax document on behalf of an entity follows authority to sign a return for that entity. Therefore, a corporation officer’s signature of a partnership return, where the corporation is a partner of the partnership, is prima facie valid, and the Service does not have to verify that the signee is authorized to sign.

Earlier versions of the Form 1065 instructions, prior to 2017, required a general partner or LLC member–manager to sign the return. The rationale for this more restrictive requirement was addressed in Field Service Advice Memorandum 1993–747, which cited General Counsel Memorandum 38781: “Although the statute and regulation do not specify, it is Service position that only a general partner may sign the partnership return. … Therefore, the signature instructions accompanying the Form 1065 mandate that only a general partner may execute the return.” Based on the updated language in the Form 1065 instructions, the Service’s position appears to have changed and now follows the plain language of Sec. 6063.

Partnership election-only filing

Filing and signature requirements for partnerships, such as certain foreign partnerships, that have no filing obligation but wish to make an election affecting the computation of taxable income are found in Regs. Sec. 1.6031(a)-1(b)(5). The regulation specifies that a return filed “solely to make an election is not a partnership return. Thus, such a return is not a return filed under section 6031(a) … (except regarding the specific election issue).”

The Regs. Sec. 1.6031(a)-1(b)(5) signature requirement differs from Sec. 6063, as it requires the return must be signed by:

(i) Each partner that is a partner in the partnership at the time the election is made; or

(ii) Any partner of the partnership who is authorized (under local law or the partnership’s organizational documents) to make the election and who represents to having such authorization under penalties of perjury.

If authority to make such an election is not given to a particular partner, then every partner in the partnership would be required to sign the return. As many tax preparers can attest, getting a return or electronic filing authorization signed by a single partner, let alone every partner, can at times feel like a monumental task. Therefore, confirming that either the partnership’s organizational documents or local law grants authority to a partner or partners to make any necessary elections can greatly simplify the filing process as well as help ensure that the elections can be timely made.

Authority to act on behalf of a partnership under the BBA rules

Sec. 6223(a), as amended by the Bipartisan Budget Act of 2015 (BBA), P.L. 114–74, dictates that “[e]ach partnership shall designate … a partner (or other person) with a substantial presence in the United States as the partnership representative who shall have the sole authority to act on behalf of the partnership.” As called out directly in the Code section, the partnership representative does not have to be, and is often not, a partner in the partnership.

Regs. Sec. 301.6223–1(b)(3)(i) clarifies that an entity may also be the partnership representative. However, “[a] designated individual must be appointed by the partnership at the time of the designation of the entity partnership representative” (Regs. Sec. 301.6223–1(b)(3)(ii)). A designated individual is defined by the regulation as “the individual through whom such entity partnership representative acts” (Regs. Sec. 301.6223–1(b)(3)(i)). Eligibility rules as well as the process of appointing and/or terminating a partnership representative designation is beyond the scope of this item, but the importance of the designation should not be overlooked. This is highlighted in Regs. Sec. 301.6223–2(a):

The actions of the partnership and the partnership representative … bind the partnership, all partners of the partnership … and any other person whose tax liability is determined in whole or in part by taking into account directly or indirectly adjustments determined under subchapter C of chapter 63. … For instance, a settlement agreement entered into by the partnership representative on behalf of the partnership … binds all persons described in the preceding sentence.

The partnership representative not only can bind the partnership and partners through its actions or inactions but also “has the sole authority to act on behalf of the partnership for all purposes under subchapter C of chapter 63” (Regs. Sec. 301.6223–2(d)(1)). Furthermore, this authority is not limited by “state law, partnership agreement, or other document or agreement” (id.). While Regs. Sec. 301.6223–2(d)(2)(i) does limit the binding authority of the partnership representative to only purposes under Subchapter C of Chapter 63 (Secs. 6221—6241), such authority can have significant implications for the partnership and its partners. One such example is the partnership representative’s ability to consent to an extension of the period of limitation on making adjustments under Sec. 6235(b) (Regs. Sec. 301.6223–2(b)).

The recent CCA

CCA 202505027, released in January 2025, addressed whether consents to extend the time to make partnership adjustments were invalid if the person who signed Form 872–M, Consent to Extend the Time to Make Partnership Adjustments, was different than the designated individual of the entity partnership representative named on the partnership’s 2018 and 2019 returns. In concluding that the consents were invalid, the CCA relied on the fact that “[s]ection 6223(a) provides that the [partnership representative] has the sole authority to act on behalf of the partnership.”

Why is a signature so important?

In CCA 202505027, the partnership had filed its 2018 and 2019 returns on Sept. 13, 2019, and Sept. 14, 2020, respectively. As the ruling pointed out, “Under section 6235(a), the Service generally has three years from the date a return is filed or its original due date, whichever comes later, to make a proposed adjustment”; however, this date “can be extended by agreement pursuant to section 6235(b).” Therefore, without a valid consent to extend such dates, the proposed adjustments would have had to be made by Sept. 13, 2022, for the partnership’s 2018 return and Sept. 14, 2023, for its 2019 return.

In this situation, four separate consents to extend the date were signed. The last of the consents was signed on Aug. 6, 2024, and extended the period of limitation for the partnership’s 2018 and 2019 returns until April 30, 2026. Since such consents were invalid, the period of limitation for the Service to make proposed adjustments to the partnership’s 2018 and 2019 returns had already expired. As such, the Service would be prohibited from making any adjustments.

In most scenarios, the result reached in this CCA would be taxpayer–friendly, assuming the proposed adjustments made by the IRS are unfavorable. However, this will not always be the case. Going back to the earlier discussion of who can sign partnership returns, a failure of a partner to sign the return could have significant ramifications. CCA 201425011 addressed the issue of whether a return not signed by a partner or LLC member is a valid return. In concluding the return was not valid, the memorandum stated:

In Beard v. Commissioner … the Tax Court listed four criteria for determining “whether a document is sufficient for statute of limitations purposes.” One of the criteria is that “the taxpayer must execute the return under penalties of perjury.” … Thus, a partnership return signed by a return preparer on the partnership signature line is not a valid return.

As a result, a partnership return invalidated by an erroneous signature would not start the running of the general three–year period of limitation in Sec. 6235(a). Further highlighted in CCA 200907030, authorizing a nonpartner to sign a return on behalf of the partnership in an operating agreement “would be irrelevant if the person who signed was not a ‘partner’ as required by the statute” since “[t]he operating agreement cannot repeal the statute.” If the period of limitation for the Service to make proposed adjustments never starts because the return was invalid, then the general three–year period will never expire.

Final thoughts

The signing of a tax return or other tax form is often the last step prior to its submission. This may occur at or near the filing deadline or after considerable effort has been invested in its preparation. No one wants to miss a deadline because a signature could not be obtained. However, as addressed in the recent CCA as well as prior cases and rulings, a failure to obtain the proper signature on a partnership return or other form can have significant consequences for the partnership, its partners, or the government. Therefore, taxpayers and their advisers should ensure that tax returns and other filings are signed by a partner, partnership representative, or authorized person as required. As with so many of the partnership rules, the answer to who is the correct person to sign a particular tax form is: It depends!

Editor

Robert Venables, CPA, J.D., LL.M., is a tax partner with Cohen & Co. Ltd. in Fairlawn, Ohio.

For additional information about these items, contact Venables at rvenables@cohencpa.com.

Contributors are members of or associated with Cohen & Co. Ltd.