Partnership Return Signatories

What Is a Partnership Return?

A partnership is a business entity where two or more individuals agree to share the profits, losses, and management of the company. Partnerships don’t directly pay federal income tax. Instead, they file Form 1065 with the IRS to report their financial activities. Afterward, individual partners report their share of income or loss on their personal tax returns using Schedule K-1.

The IRS requires partnerships to file their tax return by the 15th day of the third month following the end of the tax year (usually March 15 for calendar year partnerships). Along with the details on income and deductions, Form 1065 must be signed by an authorized party.

Who Can Sign a Partnership Return?

1.General Partners

The most common and logical individuals authorized to sign a partnership return are the general partners. General partners have the authority and responsibility to manage the day-to-day operations of the partnership, which includes tax filings. The IRS stipulates that one of the general partners must sign the return.

This person may be:

The founding partner
A managing partner
A partner who has been given specific authority for tax matters

The signing partner affirms that the return is complete and accurate to the best of their knowledge.

2.Limited Partners

Limited partners usually don’t have a say in the daily management of the business and thus generally don’t sign the return. However, if a limited partner has been given managerial authority over tax matters or specifically authorized by the partnership agreement, they may sign.

3. Authorized Tax Professional

In some cases, a partnership may hire a tax professional or Certified Public Accountant (CPA) to prepare and file their tax return. While the tax professional can prepare the return, they are not automatically allowed to sign it unless they have been authorized by the partnership through a valid Power of Attorney (Form 2848).

If a tax professional is authorized, they must attach Form 2848 to the partnership return when filing it.

4. Managing Members of an LLC (Limited Liability Company)

If the partnership is structured as a multi-member LLC (taxed as a partnership), the managing member typically has the authority to sign the return. An LLC taxed as a partnership must file Form 1065 just like any other partnership, and the managing member holds the same role as a general partner in a traditional partnership.

5. A Designated Officer or Agent

In some situations, partnerships may authorize an individual who is neither a partner nor a tax professional to sign the return. This would also require a Power of Attorney (Form 2848). For example, if a partnership has an internal accounting or legal team, a member of that team could be designated as the authorized signatory.

However, this is less common and must be properly documented in the partnership’s agreement or legal documents to avoid disputes.

What Happens if the Wrong Person Signs?

If an unauthorized individual signs the partnership return, it may result in the return being considered incomplete or invalid. The IRS may reject the filing, which could lead to penalties or interest if the error isn’t corrected in a timely manner. It’s critical to ensure the right person signs the return to avoid these issues.

Electronic Filing: Who Signs?

For electronically filed returns, the IRS still requires the return to be “signed” by an authorized individual. The process is completed using an electronic signature or PIN number, which the authorized person (typically a general partner) must obtain and use when filing. Even when using a tax professional to e-file the return, the authorized individual must still approve and sign off on the return before it is submit.

To visit:https://www.mca.gov.in

FAQs

1. Who is typically allow to sign a partnership return?

Ans: A general partner or managing partner is usually the one authorize to sign Form 1065, the partnership return.

2. Can a limited partner sign the partnership return?

Ans: Generally, no. Limited partners don’t manage the partnership, but they can sign if the partnership agreement gives them that authority.

3. Can a tax professional sign the return?

Ans: Yes, but only if the partnership gives them Power of Attorney (Form 2848). Otherwise, they can prepare the return but not sign it.

4. Can all partners sign the return?

Ans: No, only one authorized partner, typically a general partner, is require to sign the return.

5. Can an employee of the partnership sign the return?

Ans: Yes, but only if they have been grant Power of Attorney to do so by the partnership.

6. What happens if the wrong person signs the return?

Ans: The return may be reject by the IRS, which could lead to penalties or delays in processing.

7. Do managing members of an LLC taxed as a partnership sign the return?

Ans: Yes, the managing member of a multi-member LLC (treated as a partnership) can sign the return.

8. Do I need to sign the return if it’s electronically file?

Ans: Yes, the authorized partner still needs to “sign” it using an electronic signature or PIN.

9. Can more than one person sign the partnership return?

Ans: No, only one authorized partner or designated person needs to sign the return.

10. Can I sign my partnership return without any formal authorization?

Ans: No, you must be designate as the authorized partner in the partnership agreement or given Power of Attorney to sign.

Who can sign a Partnership Return?