Although a partnership pays no income tax, the Internal Revenue Service requires partnerships to file an annual information return that states the amount of distributions made to each partner.

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Although partnerships are not subject to income tax, they are required to file an annual information return (Form 1065) with the IRS. This return includes details on the partnership's income, deductions, and credits. It also reports each partner's share of the partnership's income, gains, losses, deductions, and credits. However, partnerships do not pay income tax themselves; instead, each partner includes their share of the partnership's income on their own individual tax return.

Although a Partnership Pays No Income Tax, the Internal Revenue