The IRS Form 8988 Guide: Section 6226 Push-Out Election

Introduction – What Is Form 8988?

IRS Form 8988, titled Election for Alternative to Payment of the Imputed Underpayment – IRC Section 6226, is a critical procedural tax form administered by the Internal Revenue Service (IRS) and the U.S. Department of the Treasury. It operates under the centralized partnership audit regime established by the Bipartisan Budget Act of 2015 (BBA).

When an IRS audit of a partnership concludes, the partnership faces a default requirement to pay the resulting tax liability at the entity level. Form 8988 is the official document used by the Partnership Representative (PR) to legally execute a “push-out election,” shifting the tax obligation from the partnership entity directly to the partners who owned the business during the audited tax year.

Purpose of the Form – Why Does Form 8988 Exist?

Under default BBA audit rules, when the IRS issues a Notice of Final Partnership Adjustment (FPA), it assesses an “imputed underpayment” (a collective tax assessment) calculated at the highest statutory tax rate (typically 37 percent). The partnership is required to pay this assessment out of current partnership operating funds. This default rule can be deeply unfair to current partners, as they are forced to bear the cost of tax errors made years earlier by former partners who may no longer own an interest in the business.

Internal Revenue Code Section 6226 provides a statutory alternative known as the push-out election. Form 8988 is the formal legal mechanism that activates this alternative. By filing Form 8988, the partnership relieves itself of entity-level tax liability and commits to pushing the audit adjustments down to the individual reviewed-year partners, who then calculate and pay their own share of the tax.

Who Needs to File This Form?

Form 8988 is filed exclusively by the designated Partnership Representative (PR) or Designated Individual (DI) on behalf of an audited BBA partnership. Filing is required if the partnership meets all of the following conditions:

• Received a Notice of Final Partnership Adjustment (FPA): The IRS completed an examination and mailed an official FPA proposing an imputed underpayment.
• Elected the Push-Out Option: The partnership decided not to pay the tax assessment at the entity level and instead chose to push the adjustments out to its partners under Section 6226.
• Within the 45-Day Window: The form is completed, signed, and submitted within the strict statutory timeframe allowed by federal law.

Individual partners do not file Form 8988. The Partnership Representative files Form 8988 on behalf of the partnership, which later triggers the issuance of Form 8986 statements to each partner.

Who Is Exempt / Not Required to File?

Many partnerships will never need to submit Form 8988. A partnership is exempt or not permitted to use this form under the following circumstances:

• Paying at the Entity Level: The partnership agrees to pay the imputed underpayment directly to the IRS from its own funds rather than pushing the liability to partners.
• BBA Opt-Out Partnerships: Small partnerships with 100 or fewer qualifying partners that made a valid election under Section 6221(b) to opt out of the centralized BBA audit rules on their original Form 1065.
• Administrative Adjustment Requests (AARs): Partnerships that push out adjustments as part of an AAR do not use Form 8988; AAR push-outs are elected directly on Form 1065 and Form 8082.
• No Audit Underpayment: Partnerships that have not been audited or whose audit concluded with no proposed tax adjustments.

When to File Form 8988

Form 8988 is governed by one of the strictest, most unforgiving deadlines in the entire Internal Revenue Code. The form must be filed within 45 calendar days of the date the IRS mails the Notice of Final Partnership Adjustment (FPA).

Crucial Rule: The 45-day deadline is fixed by federal statute under Section 6226(a)(1) and cannot be extended by the IRS for reasonable cause, administrative delays, or any other reason. If you file Form 8988 even one day late, the push-out election is legally void, and the partnership becomes permanently liable for the full tax bill at the top 37 percent rate.

Where and How to File

Under IRS administrative guidelines, Form 8988 must be submitted electronically through the IRS BBA Online Form Submission Service (OFSS) or dedicated BBA partnership digital portal. General e-file software and standard tax preparation programs cannot transmit this form.

The Partnership Representative must download the official fillable PDF from the IRS portal, complete all fields, sign the document using an approved 5-digit e-services PIN signature (or authorized digital signature), attach the required partner listing, and upload the package. If a paper submission is specifically authorized under an approved hardship waiver, it must be mailed to the designated IRS address as per instructions on the FPA.

Step-by-Step Instructions to Fill Form 8988

Form 8988 is a concise two-page legal election that identifies the audited partnership, specifies the tax liabilities being pushed out, and provides a sworn declaration.

Header Information

Enter the legal name of the partnership, its Employer Identification Number (EIN), the audited tax year-end date (the “reviewed year”), and the 10-digit Audit Control Number (ACN) found on the FPA correspondence. Enter the exact date the IRS mailed the FPA to establish compliance with the 45-day rule.

Part-by-Part Line Breakdown

Part & Section	Form Focus	Filing Directions
Part I	Section 6226 Election	Check the box formally declaring that the partnership elects the alternative to payment of the imputed underpayment under Section 6226. Indicate whether the election applies to the general imputed underpayment, specific underpayments, or all underpayments listed in the FPA.
Part II	Partnership Representative Details	Enter the full legal name, Taxpayer Identification Number (SSN or EIN), business address, and telephone number of the Partnership Representative (and Designated Individual, if the PR is an entity).
Part III	Reviewed-Year Partner Attachment	Confirm that a complete, separate listing of all reviewed-year partners is attached to the election. The roster must include each partner’s legal name, TIN, mailing address, and ownership percentage.
Part IV	Perjury Declaration	The Partnership Representative or Designated Individual must sign and date the election under penalties of perjury, certifying that all statements and attached rosters are true and complete.

Required Documents and Information Needed Before Filling

Because the 45-day window moves quickly, gather the following records immediately upon receiving the FPA:

• Notice of Final Partnership Adjustment (FPA): Letter 5893-A or Letter 5895 showing the final audit adjustments and the postmark date that started the 45-day clock.
• Audit Control Number (ACN): The mandatory 10-digit number assigned by the IRS to your specific examination case.
• Reviewed-Year Partner Roster: A complete, verified database of all individuals and entities who were partners during the audited year, including current mailing addresses and verified Social Security Numbers or EINs.
• IRS E-Services Credentials: An active IRS e-services account and 5-digit PIN for the Partnership Representative to execute the electronic signature on the BBA portal.

Common Mistakes to Avoid

A single procedural misstep on Form 8988 can void the push-out election entirely. Watch out for these critical mistakes:

• Missing the 45-Day Deadline: Waiting too long to make a decision. The 45-day statutory clock cannot be paused or extended under any circumstances.
• Failing to Attach the Partner Listing: Submitting Form 8988 without an attached roster of reviewed-year partners. The IRS will reject the election as incomplete, which may cause you to miss the 45-day window.
• Submitting on Paper Without a Waiver: Mailing a paper form when electronic portal submission is mandatory. Unauthorized paper filings are returned unprocessed.
• Unauthorized Signatures: Having a managing partner, outside CPA, or general counsel sign the form. Only the officially recognized Partnership Representative or Designated Individual can legally execute Form 8988.
• Forgetting the Follow-Up Steps: Believing Form 8988 completes the push-out process. Form 8988 is only the election; the partnership must subsequently issue Forms 8986 to partners and submit Form 8985 to the IRS within 60 days of the adjustments becoming finally determined.

Penalties for Non-Filing or Errors

Because Form 8988 is an elective form, there is no direct penalty for failing to file it. However, the indirect consequences of a missing or invalid election are severe:

• Automatic Entity-Level Tax Liability: If Form 8988 is not timely filed or is declared invalid, the partnership loses the right to push out adjustments. The partnership is immediately required to pay the full imputed underpayment at the top 37 percent tax rate.
• Failure-to-Pay Penalties: If the partnership cannot pay the entity-level tax assessment, the IRS assesses statutory failure-to-pay penalties under Section 6651 and compounding interest under Section 6601 against the partnership.
• Severe Investor Disputes: Depleting current partnership cash reserves to pay for a prior year’s tax error frequently leads to internal lawsuits and disputes between current and former partners.

Related Forms and Schedules

Form 8988 operates at the critical turning point of a BBA partnership examination:

• Form 8989: Request to Revoke the Election for Alternative to Payment of the Imputed Underpayment (the form used if the partnership seeks IRS permission to cancel a push-out election).
• Form 8985: Pass-Through — Statement Transmittal/Partnership Adjustment Tracking Report (the master transmittal filed after Form 8988).
• Form 8986: Partner’s Share of Adjustment(s) to Partnership-Related Item(s) (the individual statements furnished to partners following Form 8988).
• Form 8978: Partner’s Additional Reporting Year Tax (used by partners to calculate and pay their tax on Form 8986 adjustments).
• Form 8980: Partnership Request for Modification of Imputed Underpayments Under IRC Section 6225(c).

Frequently Asked Questions

What is a Section 6226 push-out election?

A push-out election is an elective procedure under the BBA audit regime where an audited partnership shifts the responsibility for paying audit adjustments from the partnership entity to the partners who held interests during the audited year.

Can the 45-day deadline to file Form 8988 be extended?

No. Under Internal Revenue Code Section 6226(a)(1), the 45-day deadline is statutory and cannot be extended by the IRS, regardless of reasonable cause, natural disasters, or administrative hardship.

Can a partnership revoke Form 8988 after filing it?

Once made, a Section 6226 election is binding and can only be revoked with the formal consent of the IRS. The partnership must file Form 8989 to request permission to revoke the election.

What happens after the IRS receives Form 8988?

The IRS reviews the submission and issues Letter 5931, which officially responds to the election and confirms whether the push-out request was deemed valid.

What is the next step after filing Form 8988?

Once the audit adjustments become finally determined, the partnership has 60 days to prepare and deliver Forms 8986 to all reviewed-year partners, and submit master transmittal Form 8985 along with copies of all Forms 8986 to the IRS.

Can we file Form 8988 if we filed an Administrative Adjustment Request (AAR)?

No. Form 8988 is used strictly for examinations that conclude with a Notice of Final Partnership Adjustment. Push-out elections resulting from an AAR are made directly on Form 1065, Form 8082, and Form 8985.

Conclusion – Key Takeaways Summarized

IRS Form 8988 is the single most important procedural election for partnerships seeking to avoid entity-level tax assessments under the BBA centralized audit regime. By executing a Section 6226 push-out election, the partnership shifts audit liabilities to the partners who actually earned the income during the reviewed year.

Because the 45-day deadline is absolute and cannot be extended, partnerships must act immediately upon receiving an FPA. Verify that your Partnership Representative executes the fillable PDF, attach an accurate reviewed-year partner roster, submit the form electronically via the IRS BBA portal, and prepare for the subsequent 60-day window to issue Forms 8986.