Partnerships, LLPs and entities classified as partnerships
Form 8865 for US Partners in Foreign Partnerships
An interest in a Canadian partnership, an Indian LLP or another foreign entity treated as a partnership for US tax can require Form 8865. Gurleen Kaur, CPA licensed in British Columbia and Washington State, works out your category and prepares the filing.
Quick answer
Who files Form 8865?
Under the Form 8865 instructions, a US person files when they control a foreign partnership through more than a 50% interest (Category 1), own 10% or more while US persons each owning 10% control it (Category 2), contribute property to it in certain cases (Category 3), or acquire, dispose of or change a 10% interest (Category 4). The penalty for Category 1 and 2 filers who fail to file is US$10,000 per partnership per year, with up to US$50,000 more after IRS notice.
The four categories
Source: Form 8865 instructions. Whether a foreign entity is a partnership for US tax depends on its classification, which should be confirmed first.
| Category | Who it covers |
|---|---|
| Category 1 | A US person who controlled the foreign partnership: more than a 50% interest at any time during its tax year |
| Category 2 | A US person owning a 10% or greater interest while the partnership was controlled by US persons each owning at least 10%, if there is no Category 1 filer |
| Category 3 | A US person who contributed property in exchange for an interest and owned at least 10% immediately afterwards, or met the value test in the instructions |
| Category 4 | A US person with a reportable acquisition, disposition or change in proportional interest under section 6046A |
Penalties
US$10,000 for each tax year of each foreign partnership for Category 1 and 2 filers who fail to furnish the information on time, and a further US$10,000 for each 30-day period after 90 days from an IRS notice, up to US$50,000 (IRS).
Treaty-based positions are disclosed separately on Form 8833.
What to gather
- Partnership agreement and ownership history
- Financial statements translated to US dollars
- Your capital account, contributions and distributions
- Transactions between you and the partnership
- Any entity classification election
Behind on Form 8865?
If the IRS has not contacted you, late information returns are generally attached to an amended return under the delinquent international information return procedures, with a reasonable-cause statement. The IRS states that penalties may still be assessed during processing. Compare your options in our catch-up guide.
Common questions
Is an Indian LLP a partnership for US tax?
It depends on the entity's US classification under the entity classification rules and any election. That determines whether Form 8865, Form 5471 or another form applies, so it is the first question to answer.
I own 20% of a Canadian partnership. Do I file?
Possibly. If US persons each owning at least 10% together control it, a 10% owner can be a Category 2 filer. Acquiring or disposing of a 10% interest can also make you a Category 4 filer for that year.
What is the penalty for not filing Form 8865?
For Category 1 and 2 filers, US$10,000 per partnership per year, plus US$10,000 for each 30-day period after 90 days from an IRS notice, up to US$50,000.
Does contributing money to a foreign partnership trigger Form 8865?
A contribution can make you a Category 3 filer if you hold at least 10% immediately afterwards or the value test in the instructions is met.
Can another partner file for me?
The instructions allow multiple Category 1 filers to satisfy the requirement with one form in some cases, with a statement attached to each non-filing partner's return.
How do I fix missed years?
If the IRS has not contacted you, late forms are generally filed with an amended return and a reasonable-cause statement, though penalties may still be assessed.
Sources
Every rule and figure on this page links to the IRS, CRA or other official source it comes from. Amounts change; we re-check them before each engagement.
- IRS: Instructions for Form 8865
- IRS: About Form 8833 (treaty-based return position)
- IRS: Delinquent international information return submission procedures
Gurleen Kaur, CPA licensed in British Columbia and Washington State. Last updated October 21, 2026. This page is general information, not tax or legal advice for your situation.
Related guides: Form 5471, Form 8858, Behind on US filings.
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