Starting in the 2024 tax year, domestically owned pass-through entities with only U.S. shareholders or partners are exempt from filing IRS international tax forms Schedule K-2 and K-3.
The US Internal Revenue Service (IRS) issued updated guidance on 9 July 2025, in which it exempts certain domestically owned pass-through entities (S corporations and partnerships) from filing international tax forms Schedule K-2 and Schedule K-3, if all shareholders or partners are US persons, starting in tax year 2024.
Specifically:
- S corporations are exempt if they answer “Yes” to Question 11 of Schedule B on Form 1120-S.
- Partnerships are exempt if they answer “Yes” to Question 4 of Schedule B on Form 1065.
Shareholders and partners must request Schedule K-3 annually if needed, but they can opt for automatic delivery in future years after making the initial request. This change streamlines the delivery process, ensuring that Schedule K-3 is only provided to those who need it for foreign tax reporting purposes.
