IRS to Cross-Reference K-1 Information
We all know the IRS cross-references information between W-2 forms and 1099 forms and the tax returns of the recipients. If there is a discrepancy between what the recipient reports on his tax return and the amount on the official form, a correspondence is initiated in which the IRS attempts to straighten out the matter.
The IRS has not attempted any such cross reference with K-1 forms, those forms that show your share of ownership in a partnership, trust, or s corporation. Until now. The IRS is ready to start comparing information on the K-1 forms to amounts listed on individual tax returns. The K-1 will be treated just like a W-2 or a 1099 form.
As a result of this new program, all taxpayers and tax practitioners should be warned to pay extra close attention to these forms this year and in the future.