SECTION 2. BACKGROUND

.01 Section 6031(a) of the Code provides, in part, that every partnership shall make a return for each taxable year, stating specifically the items of its gross income and deductions, and such other information as the Secretary may by forms and regulations prescribe, and shall include in the return the names and addresses of the individuals who would be entitled to share in the taxable income if distributed and the amount of the distributive share of each individual.

.02 Section 6031(b) provides, in part, that each partnership required to file a return for any partnership taxable year shall (on or before the day on which the return for such taxable year was required to be filed) furnish to each person who is a partner or who holds an interest in such partnership as a nominee for another person at any time during such taxable year a copy of such information required to be shown on such return as may be required by regulations.

.03 Section 1.6031(b)–1T provides, in part, that each partnership required to file a return for any partnership taxable year shall (on or before the day on which the return for such taxable year is required to be filed) furnish to each person who is a partner or who holds an interest in such partnership as a nominee for another person at any time during such taxable year a written statement containing the information prescribed by section 1.6031(b)–1T(a)(3) and any additional information required by form or accompanying instructions. This information includes the partner’s distributive share of any partnership income, gain, loss, deduction, or credit required to be shown on the partnership return.

.04 Rev. Proc. 2011–61, 2011–52 I.R.B. 990, provides guidance on the requirements for forms accepted as substitutes for official IRS forms. Section 7.1 of Rev. Proc. 2011–61 sets forth specific guidelines for substitute Schedule K–1s. Section 7.1.1 of Rev. Proc. 2011–61 provides, in part, that substitute Schedule

2012–10 I.R.B. 453 March 5, 2012

K–1 creates a material risk that the recipient will not be able to access the Schedule K–1, the furnisher must, prior to changing the hardware or software, provide the recipient with a notice. The notice must describe the revised hardware and software required to access the Schedule K–1 and inform the recipient that a new consent to receive the Schedule K–1 in the revised electronic format must be provided to the furnisher. After changing the revised hardware and software, the furnisher must obtain from the recipient, in the manner described in Section 4.01 of this revenue procedure, a new consent or confirmation of consent to receive the Schedule K–1 electronically.

.04 Examples. The following examples illustrate the rules of Section 4 of this revenue procedure:

(1). Example 1. Furnisher F sends Recipient R a letter stating that R may consent to receive Schedule K–1 electronically on a website instead of in a paper format. The letter contains instructions explaining how to consent to receive Schedule K–1 electronically by accessing the website, downloading the consent document, completing the consent document and e-mailing the completed consent back to F. The consent document posted on the website uses the same electronic format that F will use for the electronically furnished Schedule K–1. R reads the instructions and submits the consent in the manner provided in the instructions. R has consented to receive the Schedule K–1 electronically in the manner described in Section 4 of this revenue procedure.

(2). Example 2. Furnisher F sends Recipient R a secure e-mail stating that R may consent to receive Schedule K–1 electronically instead of in a paper format. The secure e-mail contains an attachment instructing R how to consent to receive Schedule K–1 electronically. The e-mail attachment uses the same electronic format that F will use for the electronically furnished Schedule K–1. R opens the attachment, reads the instructions, and submits the consent in the manner provided in the instructions. R has consented to receive Schedule K–1 electronically in the manner described in Section 4 of this revenue procedure.

(3). Example 3. Furnisher F posts a notice on its website stating that Recipient R may receive Schedule K–1 electronically instead of in a paper format. The website contains instructions on how R may access a secure webpage and consent to receive the statements electronically. R will receive the K–1 through the secure webpage in the same format as the consent documents. By accessing the secure webpage and giving consent in the manner provided in the instructions on the website, R has consented to receive Schedule K–1 electronically in the manner described in Section 4 of this revenue procedure.