Federal Adjustments for Partnerships

No later than 90 days after the final determination date of the federal audit change, your partnership must:

• File Form M3X, Amended Partnership Return, and Schedule M3BBA
• Include a copy of the federal partnership audit report (federal Form 15027 and Form 886‐A) as an attachment to Schedule M3BBA

Your partnership must pay the partnership-level tax no later than 180 days after the final determination date.

Use our forms search to find any forms or schedules needed to report your adjustments.

Your partnership must:

• Complete the 2021 Schedule M3BBA and file it with the appropriate reviewed year’s Form M3X, Amended Partnership Return
• Write “BBA Partnership” in red at the top of the Form M3X
• Report any change in tax from line 38 of Schedule M3BBA to line 2, column C of Form M3X
  • Next to line 2, write “Schedule M3BBA”

Use our forms search to find any forms or schedules needed to report your adjustments.

This election allows partnerships to report and pay the Minnesota income tax, penalty, and interest resulting from a federal BBA centralized partnership audit change on their partners’ behalf.

This relieves the partner from filing a return to report their pro rata share of the federal adjustments, unless a partner is excluded from the calculation by Minnesota Statutes, section 289A.382, subdivision 3(a)(2)(i)-(ii).

Who may make the election?

The partnership or each tiered partner may make this election.

Partnerships may not make the election to report:

• The federal adjustment that results in unitary business income to a corporate partner required to file as a member of a combined report
• Any final federal adjustments resulting from an administrative adjustment request
• If your partnership is not otherwise subject to any reporting or payment obligations to Minnesota

No later than 90 days after the final determination date, your partnership must:

• File Form M3X, Amended Partnership Return, and include the following:
  • The applicable federal form:
    • A copy of the federal partnership audit report (federal Form 15027 and Form 886‐A) or
    • A copy of the federal administrative adjustment request and Form 8985
  • Pro-forma amended federal Form 1065 and Schedules K-1 for direct partners
  • Amended Schedules KPI and KPC for direct partners
  • Any amended composite reporting and payment for all direct partners who were included in composite tax in the reviewed year
  • Any amended nonresident withholding reporting and payment for all direct partners who were subject to nonresident withholding under Minnesota Statutes, section 290.92, subdivision 4b in the reviewed year
  • Any amended Schedule PTE and payment for any additional PTE tax if the electing partnership elected the pass-through entity tax on their original return filing
• Notify each direct partner of their distributive share of the final federal adjustments by providing each direct partner their applicable pro-forma Schedule K-1 and amended Schedule KPI or KPC

No later than 180 days after the final determination date, each direct partner, other than a tiered partner, must:

• Use the pro-forma Schedule K-1 and amended Schedule KPI or KPC received from the partnership or tiered partner to generate a pro-forma amended federal return and amended Minnesota income tax return
• File the amended Minnesota income tax return and pay any tax due

When a tiered partner receives a pro-forma Schedule K-1 and amended Schedule KPC from the partnership, the tiered partner may elect to pay at the partnership level, or they must report the adjustments as described under Partnership Not Making the Partnership Pays Election section.

To designate a person other than your federal partnership representative, complete the State Partnership Representative Designation on page 4 of Schedule M3BBA.

Enter the partnership’s name, federal ID number, and Minnesota Tax ID number.

Enter the designated state partnership representative’s name, address, phone number, taxpayer identification number, and email address.

The designation must be signed and dated by someone with legal authority to sign agreements on behalf of your partnership.

An owner, officer, authorized agent of the partnership, or the designee must send the department a signed and dated statement ending the designee’s authority and designating a new designee or stating that the federal partnership representative is designated.

If your partnership makes the partnership pays election on Schedule M3BBA, Partnership Audit Report, include the designation with Schedule M3BBA.

For all other partnership designations and any revocations of previous designations, send to:

Minnesota Department of Revenue
Partnership Tax
Mail Station 5170
600 N. Robert St.
St. Paul, MN 55146-5170

If you have partnership income, you must report (or add back) additional income on your Minnesota return if all of these apply:

• The partnership elected to be treated as a large partnership at the federal level
• The IRS adjusted the partnership’s federal return, increasing partnership income
• The partnership elected not to pass through the adjustments to the partners, but instead paid the additional federal tax at the maximum corporate tax rate

Do not make this addition if you are a nonresident individual partner who elected to have the partnership pay composite income tax on your behalf.

To report the income on your return, complete Schedule M1M, Income Additions and Subtractions, as follows:

1. Cross out any unused line under Additions to Income on Schedule M1M.
2. Write the amount you are reporting on the crossed-out line.
3. Write "partner of electing large partnership" on the dotted line to the left of the amount.
4. Include Schedule M1M when submitting Form M1, Individual Income Tax.

For details, see Minnesota Statute 290.0133, subdivision 10.