IRS Expands Exemption for Partnerships’ Foreign-Income Reports

The IRS is allowing more partnerships and S corporations to take advantage of exemptions from requirements to file reports on their foreign income, which many tax preparers have complained are burdensome.

The move, which the IRS announced in a statement Wednesday, means that more partnerships won’t have to complete Schedules K-2 and K-3, in which partnerships provide greater detail on their foreign income than on the existing Schedule K-1. The changes take effect with tax year 2024.

Originally, the IRS had required partnerships to file K-2 and K-3 schedules even if they didn’t have any foreign activity or foreign partners, ...