The Use of Schedule K-1 Data to Address Taxpayer Noncompliance Can Be Improved

The Commissioner, Wage and Investment Division, should conduct periodic outreach to encourage submission of reliable Schedule K-1 data to the IRS. Topics should include ****************************2********************************* ****************************************2********************************** ****************************************2***************** The outreach should be directed to those involved with preparing and submitting Schedule K-1 data to the IRS (e.g., flow-through entities, return preparers, tax practitioners, and tax preparation software companies).

The Commissioner, Wage and Investment Division, The Commissioner, Wage and Investment Division, should conduct a review to determine the process changes needed to increase the consistency of Schedule K-1 penalty application, especially for *********2********* e-filed Schedules K-1.

The Commissioner, Small Business/Self-Employed Division, should establish a process to use more e-filed Schedule K-1 data for noncompliance identification and determine the feasibility of transcribing more data from paper Schedules K-1.

The Commissioner, Small Business/Self-Employed Division, should enhance the information return ***2*** verification process to *******2******** in order to ensure that individuals are properly identified as payees.

The Commissioner, Small Business/Self-Employed Division, should update flow-through form instructions to explain how a flow-through entity should address reporting a deceased recipient and the steps a flow-through entity could take to ensure that accurate recipient information is entered on Schedules K-1 when ownership changes from a deceased recipient.