Reporting Federal Audit Adjustments

For each reviewed year included in federal adjustment, the partnership must compute both:

• The change in tax liability for the taxable year attributable to its nonresident partners included in the originally filed composite return; and
• The change in nonresident withholding for all other nonresident partners.

The partnership must pay the additional tax liability, and compute and pay applicable interest and penalties.

Reporting Adjustments

Partnerships must do all of these:

• File a Minnesota Form M3X, Amended Partnership Return, for each reviewed year;
• Report any related Minnesota changes for its nonresident partners on amended Schedule KPI, Partner's Share of Income, Credits and Modifications; and
• File pro-forma amended federal returns and Schedule K-1, Partner's Share of Income, Deductions, Credits, etc., with their Form M3X.

For each reviewed year included in the federal adjustment, the partnership must report all changes to its partners.

Each partner must:

• Compute their attributable share of the changes on their return
• File amended Minnesota returns for the reviewed years
• Pay the additional tax liability and compute and pay applicable interest and penalties

Reporting Adjustments

Partnerships must do all of these:

• File a Minnesota Form M3X, Amended Partnership Return, for each reviewed year
• Report any related Minnesota changes to their partners on amended Schedules KPI, Partner's Share of Income, Credits and Modifications, and KPC, Partner's share of Income, Credits and Modifications
• File pro-forma amended federal returns and Schedule K-1, Partner's Share of Income, Deductions, Credits, etc. with their Form M3X

Direct and indirect partners subject to Minnesota tax must file amended returns for each reviewed year, reporting their share of the partnership's federal adjustments on one or more of the following:

• Form M1X, Amended Minnesota Income Tax for individual partners
• Form M2X, Amended Income Tax Return for Estates and Trusts
• Form M3X, Amended Partnership Return Claim for Refund
• Form M4X, Amended Franchise Tax Return/Claim for Refund for corporate partners
• Form M8X, Amended S Corporation Return Claim for Refund

Use the Find a Form search on our website to locate forms for the years you need to file amended returns.

If a partnership or partner fails to report a federal change or adjustment of tax, the commissioner of the Minnesota Department of Revenue may recompute the tax based on available information within six years from when the partnership or partner should have reported the federal adjustments.