Form 1065 & Multi-Member Partnerships

Form 1065 With No Income and No Partner ITINs: Foreign-Owned LLC Guide

14 min readArticle

Written byLipai WangFounder · IRS-registered tax professional

Filing path

Partnership return flow (Form 1065)

How a multi-member foreign-owned LLC reports and passes income through to its partners.

Confirm 2+ members
A multi-member LLC defaults to partnership treatment.
Prepare Form 1065
Report partnership income, deductions, and allocations.
Issue Schedule K-1s
Each partner gets a K-1 with their distributive share.
Handle withholding
Foreign partners may trigger Form 8804/8805 withholding.

Key formsForm 1065Schedule K-1Form 8804/8805

Key Takeaways

A domestic multi-member LLC generally starts on the partnership path unless it elected corporate treatment.
The Form 1065 no-filing exception requires more than no revenue or no company-bank transactions.
Member-paid and off-bank costs must be reconciled and their federal treatment determined.
A filed two-partner Form 1065 generally includes two Schedules K-1.
Foreign status alone does not automatically establish that an individual must obtain an ITIN.
The IRS all-zero convention is limited to e-file; a paper return instead leaves the field blank with an attached explanatory statement.
A valid Form 7004 generally moves a calendar-year 2025 Form 1065 deadline to September 15, 2026.
The partnership-representative or valid election-out question must be resolved before final filing.
For a certified no-TIN paper-filing scenario, the ForeignLLCTax $199 partnership package prepares the return, both K-1s, the explanatory statement, and mailing instructions; the eligibility review must confirm that no partner TIN is required for the filing or another federal tax purpose.

The scenario this guide addresses

This guide covers a domestic U.S. LLC formed in Delaware during 2025, taxed as a partnership, with two individual partners who are citizens and tax residents of another country. Neither partner is a U.S. citizen or resident, neither has an SSN or ITIN, and the owners report no sales, income, business activity, or company-bank-account transactions for 2025. It also assumes the partnership believes it timely filed Form 7004. These facts are a starting point, not a filing conclusion: classification elections, off-bank costs, partner-level activity, and the extension record still must be verified.

Question 1: Is Form 1065 required when there was no activity?

A domestic LLC with two or more members is generally classified as a partnership unless it elected corporate treatment. The 2025 Form 1065 instructions say a domestic partnership generally must file Form 1065, but describe an exception when it neither receives gross income nor pays or incurs any amount treated as a deduction or credit for federal income-tax purposes. That is narrower than saying the business had no revenue or no bank transactions. A qualified reviewer should reconcile formation fees, Delaware tax, registered-agent charges, legal and accounting bills, software, bank fees, and other costs—including amounts paid personally by a member—and determine whether any amount is treated as a federal deduction or credit.

Why a zero company-bank balance is not enough

A member can pay a partnership cost from a personal account, advance money, contribute property, or enter a transaction without moving cash through the LLC's bank account. A genuinely capitalized or otherwise noncreditable amount may not itself create a current deduction or credit, but organizational-cost elections, the date the active business began, amortization, reimbursement, and partner-contribution treatment can change the answer. The filing exception turns on gross income and amounts paid or incurred that are treated as deductions or credits, not on the number of bank entries. Build a complete ledger from formation through December 31 and obtain qualified review of the treatment before relying on the exception.

Read the owner-paid formation-cost Q&A

Question 2: If Form 1065 is filed, are two K-1s included?

A partnership that files Form 1065 generally files a Schedule K-1 for each partner and furnishes the partner's copy. In a two-partner LLC, that ordinarily means two Schedules K-1. The return may also need other schedules and statements. Beginning with tax year 2024, the Schedule K-2/K-3 instructions include a small-partnership filing exception tied to all four Schedule B, question 4 conditions: less than $250,000 of gross receipts, less than $1 million of year-end total assets, timely K-1 filing and furnishing, and no Schedule M-3 requirement or voluntary filing. The partnership must also furnish the required K-1 notice and track timely partner K-3 requests. If a condition fails or a valid request applies, the required K-2/K-3 parts must be analyzed. Foreign ownership alone is not a blanket answer.

Question 3: Must both foreign partners obtain ITINs first?

Not automatically. The Form W-7 instructions describe an ITIN as a U.S. taxpayer identification number for an individual who needs one for a federal tax purpose and is not eligible for an SSN. A foreign person does not receive an ITIN merely because it would make a software field easier to complete. Review whether each partner has a U.S. individual return, withholding, treaty, reporting, or other federal tax purpose that actually requires a TIN. When an ITIN is required, Form W-7 is generally filed with the federal return that creates the need unless an IRS exception applies.

The IRS's e-file-only all-zero convention

The IRS has a specific answer for partnerships that e-file: when a foreign individual partner is not required to obtain a TIN, the partnership may enter 000-00-0000 on that partner's Schedule K-1 or K-3. This convention is limited. It does not erase a genuine TIN requirement, issue an ITIN, or authorize a fake number. It should not be copied onto a paper return. The authorized e-file provider must confirm that its software supports the IRS convention and the rest of the return. The controlling IRS page is https://www.irs.gov/businesses/what-can-be-entered-in-schedules-k-1-and-k-3-in-place-of-foreignus.

Paper filing: the practical route without TINs

A two-partner partnership is not automatically required to e-file — the mandate begins at 10 or more returns of any type per year or more than 100 partners, so a small dormant LLC may paper-file. On a paper return, never put 000-00-0000 or any invented number on a K-1: the all-zeros entry is an e-file schema convention. The standard paper approach for a foreign partner with no TIN and no TIN requirement is to leave Item E (and Schedule B-1's identifying-number column, which itself says "if any") blank and attach a short statement identifying each partner and explaining, with the IRS guidance cited, why no TIN exists or is required. Keep proof of mailing.

Question 4: Does Form 7004 extend the deadline to September 15?

A properly completed and timely filed Form 7004 generally gives Form 1065 an automatic six-month filing extension. For a calendar-year 2025 partnership, the regular due date was March 16, 2026 because March 15 fell on a Sunday, and a valid extension ordinarily moves the filing deadline to September 15, 2026. Verify the acceptance record, filed entity name, EIN, return code, and submission date. A rejected, mismatched, or late extension does not become valid merely because September 15 was entered on a calendar, and the extension does not extend a payment deadline.

The partnership representative is a separate gating issue

A partnership subject to the centralized partnership audit regime must designate a partnership representative. The representative does not have to be a partner, but must have substantial presence in the United States under the IRS rules. If an entity is named, a designated individual is also required. A small eligible partnership can sometimes elect out, but the IRS election-out process requires partner information including a U.S. TIN for each eligible partner. A partnership whose two foreign individual partners have no U.S. TIN should therefore not assume it can elect out; it must resolve the representative and audit-regime position before the return is finalized.

Foreign-partner issues that can change the answer

The simple zero-activity scenario stops being simple if the partnership had effectively connected income, U.S.-source passive income, withholding, distributions, services performed in the United States, transfers of property or money, a partner-level U.S. return, treaty claims, related entities, a corporate election, a qualified opportunity fund election, a section 761 election, or a request or fact pattern that activates K-2/K-3 reporting. Section 1446 withholding and Forms 8804, 8805, or 8813 can apply when effectively connected taxable income is allocable to foreign partners. As of this article's July 28, 2026 review, North Macedonia was not listed on the IRS income-tax-treaties A-to-Z page, so this scenario must not assume U.S. treaty relief without authoritative country-specific confirmation. Those facts require a qualified cross-border partnership review.

Delaware obligations are separate from Form 1065

Delaware's alternative-entity rules are separate from the federal partnership-return analysis. Delaware LLCs do not file the corporation annual franchise-tax report, but Delaware now generally imposes a $400 annual tax, due June 1 for the preceding calendar year. The increase applies beginning January 1, 2026, so the 2026 annual tax is due June 1, 2027. Paying or incurring a state amount also belongs in the federal books-and-records review; its exact federal treatment should be determined rather than assumed. State compliance does not decide whether the federal Form 1065 filing exception applies.

What a complete filing service would need to disclose

A service should separately state whether it provides: an eligibility and filing-requirement analysis; preparation of Form 1065; one Schedule K-1 per partner; any required K-2/K-3 or other schedules; a permitted paper-filing instruction set or transmission by an authorized e-file provider; Form W-7 support; a partnership representative or designated individual; professional tax review; and partner-level return or withholding work. A price labeled “Form 1065” should not be assumed to include every one of these services. The engagement scope and exclusions must control.

What the ForeignLLCTax Partnership package provides

The live Partnership flow at /filer/partnership prepares exactly this scenario for $199: the complete six-page Form 1065, Schedule B-1, both partner Schedule K-1s with furnishing copies, the K-2/K-3 small-partnership exception notices, and step-by-step sign-and-mail instructions with the correct IRS address. For partners with no SSN or ITIN, the package uses the paper-filing approach described above — Item E intentionally blank plus an attached explanatory statement citing the IRS guidance — so no ITIN application is needed before filing. E-file transmission, professional review, and partner-level returns are not included, and situations outside the supported scope are told so honestly before any payment.

Practical decision sequence

First, confirm the LLC is still taxed as a partnership and has an EIN. Second, reconcile all income and every cost, including member-paid and off-bank items. Third, verify the Form 7004 acceptance. Fourth, determine whether a return is required or will be filed voluntarily. Fifth, analyze each partner's federal TIN purpose and the permitted paper or authorized e-file route. Sixth, resolve the centralized-audit-regime election and partnership representative. Seventh, review K-2/K-3, Section 1446, partner-level return, and state obligations. Use the linked 20-check walkthrough to document these decisions. The ForeignLLCTax wizard runs this exact sequence against your answers and shows you the supported package — or tells you honestly to use a professional — before you pay.

Open the 20-check Form 1065 walkthrough Read the scenario Q&A

Primary sources and educational-use notice

Use the current IRS Instructions for Form 1065 (https://www.irs.gov/instructions/i1065), Schedule K-2/K-3 instructions (https://www.irs.gov/instructions/i1065s23), Instructions for Form W-7 (https://www.irs.gov/instructions/iw7), Instructions for Form 7004 (https://www.irs.gov/instructions/i7004), IRS partnership-representative guidance (https://www.irs.gov/businesses/partnerships/designate-or-change-a-partnership-representative), IRS election-out guidance (https://www.irs.gov/businesses/partnerships/elect-out-of-the-centralized-partnership-audit-regime), IRS treaty list (https://www.irs.gov/businesses/international-businesses/united-states-income-tax-treaties-a-to-z), and Delaware alternative-entity tax instructions (https://corp.delaware.gov/alt-entitytaxinstructions/). This article is general educational information, not tax or legal advice, and does not create a preparer, adviser, or attorney-client relationship.

Frequently Asked Questions

Does a two-member LLC with zero sales have to file Form 1065?

Usually a domestic partnership files Form 1065, but the instructions describe an exception when it neither receives gross income nor pays or incurs an amount treated as a federal deduction or credit. Zero sales alone is not enough; review member-paid and off-bank costs and their treatment.

Does no activity in the LLC bank account prove no filing is required?

No. Members can pay costs personally or create transactions outside the company account. Reconcile formation, state, registered-agent, legal, accounting, software, and other costs before applying the narrow exception.

What if the members paid formation costs but those costs were capitalized?

A genuinely capitalized amount that creates no current deduction or credit may not by itself defeat the wording of the no-filing exception, but organizational-cost elections, business-start timing, amortization, reimbursement, and contribution treatment are fact-specific. The current product routes every owner-paid-cost case to independent professional review instead of making that classification.

Can Form 1065 be filed without both foreign partners obtaining ITINs?

Sometimes, but the route is fact-specific. For e-file, the IRS allows 000-00-0000 on Schedule K-1 or K-3 for a foreign individual who is not required to obtain a TIN. That convention does not apply when a real federal TIN requirement exists and should not be copied onto a paper return.

Should the partners apply for ITINs just to fill the K-1 field?

Not automatically. An ITIN requires a federal tax purpose and SSN ineligibility. Determine whether each partner has a return, withholding, treaty, reporting, or other federal purpose, then follow Form W-7 and its attachment or exception rules.

Can I put 000-00-0000 on a paper Schedule K-1?

No — the all-zeros entry is an e-file schema convention, and you should never invent a TIN. On a paper return, the standard approach for a foreign partner with no TIN requirement is to leave Item E blank and attach a statement identifying the partner and citing the IRS guidance for foreign partners without TINs. The ForeignLLCTax package prepares that statement for you.

Does a two-partner Form 1065 include two Schedules K-1?

Generally yes. When Form 1065 is filed, the partnership generally files and furnishes one Schedule K-1 for each partner. Other schedules, including K-2/K-3, depend on the current rules and facts.

Can a small partnership omit Schedules K-2 and K-3?

Beginning with tax year 2024, the instructions provide a small-partnership filing exception when all four Schedule B, question 4 conditions are met, the required partner notice is furnished, and no partner request requires K-3 reporting. Each condition and request must be documented; foreign ownership alone neither grants nor defeats the exception.

Is September 15, 2026 the extended deadline?

For a calendar-year 2025 partnership, a timely and valid Form 7004 generally provides a six-month extension to September 15, 2026. Verify the IRS acceptance record, name, EIN, return code, and filing date.

Can two foreign partners with no U.S. TIN simply elect out of the partnership audit regime?

Do not assume so. The IRS election-out procedure requires partner details including a U.S. TIN for each eligible partner. If a valid election out is unavailable, the partnership must designate a representative who meets the substantial-presence requirements.

Does the ForeignLLCTax partnership product include e-file?

No — the $199 package is built for IRS paper filing, which remains fully accepted for small partnerships. You receive the complete prepared return, both K-1s, the foreign-partner no-TIN statement, and exact mailing instructions with certified-mail guidance; you print, sign, and mail it yourself. E-file transmission and professional review are not included.

form 1065partnershipmulti-member LLCSchedule K-1Section 1446foreign partners

IRS Form 1065 Instructions

Official IRS source on irs.gov

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