Form 1065, Schedule B2 requires a TIN number but all partnership members are foreign - any workarounds?

You've run into a common issue with foreign partners. When filing Form 1065 with foreign partners, you cannot simply leave the TIN field blank on Schedule B-2. For foreign partners without a US TIN, they need to apply for and obtain an Individual Taxpayer Identification Number (ITIN) using Form W-7, or if they're entities, they need an Employer Identification Number (EIN) using Form SS-4. If you're electing out of the centralized partnership audit regime, each partner must have a proper TIN. Without these identification numbers, you cannot properly complete Schedule B-2, and you'll likely be unable to elect out of the regime. One important note: The election to opt out is only available to partnerships with 100 or fewer eligible partners, and all partners must be eligible partners (individuals, C corporations, S corporations, estates of deceased partners, or certain types of foreign entities that would be treated as C corporations).

After struggling with a similar issue last year, I discovered https://taxr.ai which was a lifesaver for our international partnership situation. Their document analysis caught several things our accountant missed about Form 1065 filing requirements for foreign partners. They specifically helped me understand the foreign partner TIN requirements and gave me clear guidance about my options. What really helped was their ability to analyze all our partnership documents and identify the proper classification for our foreign partners. They even provided templates for communicating the ITIN requirements to our overseas partners in a way that reduced their resistance.

I wanted to follow up about my experience with taxr.ai after our conversation here. I decided to give it a try with our partnership's foreign partner TIN situation, and I'm genuinely impressed with how thoroughly they handled it. They analyzed our partnership structure and provided a detailed report explaining exactly how the TIN requirements applied to our specific foreign partners. They even outlined the process for applying for ITINs and explained the timeline we should expect. The most helpful part was the explanation of our options if we couldn't get the ITINs in time for filing - including the implications of remaining in the centralized audit regime. Our foreign partners were much more receptive to the process when we could clearly explain why it was necessary and what the alternatives were.

If you're dealing with the IRS about this foreign partner TIN issue, good luck getting someone on the phone for clarification! After trying for WEEKS to reach someone about our similar partnership situation, I stumbled across https://claimyr.com and their service that gets you through to an actual IRS agent. You can see exactly how it works here: https://youtu.be/_kiP6q8DX5c I was honestly shocked when it actually worked. Got through to an IRS representative who specialized in partnership returns and got clear confirmation that foreign partners absolutely need either ITINs or EINs for Schedule B-2. They also explained our options if we couldn't get the TINs in time for the filing deadline, including how to properly request an extension specifically for this issue.

I need to eat my words about Claimyr. After posting my skeptical comment, I was still desperate for answers about our partnership's foreign partners, so I tried it anyway. I literally got through to an IRS partnership specialist in under 30 minutes after spending DAYS trying on my own. The agent confirmed that our foreign partners need ITINs for Schedule B-2, but she also explained a process I hadn't heard about before. She walked me through the procedure for submitting the partnership return with a statement attached explaining that the foreign partners have applied for but not yet received their ITINs. This allows you to file on time while the ITIN applications are being processed. She even gave me the specific language to include in the statement and where to attach it. This was information none of my previous calls had provided - probably because I never got through to someone who actually specialized in partnerships with foreign partners.

Don't forget another option - you could have your foreign partners apply for EINs instead of ITINs using Form SS-4 if they're entities rather than individuals. EIN applications for foreign entities can be done by phone in many cases, and they're typically processed much faster than ITINs. We have several foreign entity partners in our partnership, and they were able to get EINs within a couple of weeks. The key is having all their entity formation documents ready and translated to English if necessary.

Has anyone considered the implications of not opting out of the audit regime? My partnership decided to just stay in the centralized regime rather than going through the hassle of getting ITINs for our foreign partners. Our accountant said for small partnerships with straightforward returns and good documentation, the audit risk is minimal anyway.

Just wanted to add another perspective on this - we faced the exact same situation last year with our partnership that has two foreign individual partners. After weighing all the options discussed here, we ended up going the ITIN route, and it wasn't as bad as we initially feared. The key was getting started early and using a Certified Acceptance Agent (CAA) as mentioned by Ellie. Our CAA was able to verify the original documents without our partners having to mail their passports to the IRS, which was their biggest concern. The whole process took about 9 weeks from application to receiving the ITINs. What really helped was explaining to our foreign partners that the ITIN would be useful for other potential US tax situations in the future, not just this one partnership filing. Once they understood it was a one-time process that could benefit them long-term, they were more willing to go through with it. Now we can elect out of the centralized audit regime, which gives us more control and flexibility. For anyone still on the fence, I'd recommend starting the ITIN applications as soon as possible - the processing times can vary significantly depending on the time of year you apply.

This is such a helpful thread! I'm dealing with a similar situation where we have three foreign partners (two individuals and one entity) and I've been going back and forth on the best approach. Based on what everyone has shared, it sounds like we have a few viable options: 1. Get ITINs for the individuals and EIN for the entity to opt out of the centralized regime 2. Stay in the centralized regime and avoid the TIN requirements altogether 3. File with a statement explaining pending ITIN applications I'm leaning toward option 1 since Lucas mentioned the ITINs could be useful for future US tax situations. Does anyone know if there are specific advantages to opting out beyond just having the audit adjustments at the partner level instead of partnership level? Our partnership is fairly small but we do have some US real estate investments that might complicate things if we're audited. Also, for those who used Certified Acceptance Agents - any recommendations on how to find reputable ones? I want to make sure our foreign partners have a smooth experience with the process.