Partnership Representative

The Internal Revenue Service (IRS) reports that the first audits conducted under the Bipartisan Budget Act Centralized Partnership Audit Regime (BBA) are wrapping up, with assessments recently issued or forthcoming.  Although the BBA only became mandatory for the 2018 tax year, taxpayers could elect into the BBA regime for the 2016 and 2017 tax years.  Over the past year, the IRS has stressed that partnership audits would be a priority for the agency going forward.  To that end, it has hired at least 50 partnership audit specialists to staff its new Large Partnership Compliance Program ...

On April 14, 2021, the IRS released a memorandum clarifying that partners and partnership representatives of TEFRA or BBA partnerships are entitled to request and receive IRS administrative file records containing partnership returns and return information, including any supporting schedules, attachments, or lists which include identifying information of persons other than the requesting party.  This memorandum serves as guidance to taxpayers pending an update to the Internal Revenue Manual.

Internal Revenue Code section 6103(e) details which parties may access returns ...

On January 14, 2021, the IRS issued Notice 2021-13 to provide transition penalty relief to partnerships complying with new rules for reporting partners’ capital account balances.

Before the 2020 tax year, partnerships could report their partners’ capital accounts for the tax year using one of a variety of methods, such as tax basis, GAAP, or section 704(b) book. However, the 2020 Form 1065 Instructions (“the Instructions??) require partnerships to calculate and report all their partners’ capital accounts using the tax basis method. The Instructions explain that if a ...

On November 20^th, the IRS released proposed regulations (REG-123652-18) regarding the centralized partnership audit regime created by the Bipartisan Budget Act of 2015.  First, these proposed regulations provide that partnerships, that have a partner that is a qualified subchapter S subsidiary (“QSub??), are not eligible to elect out of the centralized partnership audit regime.  In general, a partnership may elect out of the centralized partnership audit regime if it has 100 or fewer partners and each of those partners is an “eligible partner.??  The proposed regulations ...

On September 1st, the IRS launched the new website to serve as the single location for the Partnership Audit related regulations and other instructions and guidance for taxpayers. Please click here to site the new site.

On April 8, 2020, the IRS released Revenue Procedure
2020-23, which allows certain partnerships to file amended partnership returns
and issue amended Schedules K-1 to their partners for taxable years beginning
in 2018 and 2019, in order to claim tax benefits under the CARES Act and other
legislation.

The Bipartisan Budget Act of 2015 rewrote the provisions
governing partnership tax returns and audits. 
The new rules apply to all partnerships, except for a limited category
of partnerships eligible to elect out, and generally took effect with the
taxable year 2018.  

Section 6031 of the ...

On April 1st, the IRS Large Business & International and Small Business/Self-Employed divisions issued a memorandum (LB&I-04-0320-0005) updating prior interim guidance on filing and examining an administrative adjustment request under the Bipartisan Budget Act of 2015 centralized partnership audit regime.

On March 18th, the IRS released clarifications for instructions for Form 8082, Notice of Inconsistent Treatment or Administrative Adjustment Request under the Bipartisan Budget Act (BBA). These clarifications are updates from the 2015 BBA which implemented new partnership audit procedures.

On February 20th, the IRS provided draft instructions to Form 8978 which reflected the changes to the audit procedures of partnerships under the 2015 BBA. The form is used to compute additional reporting year tax, penalties and interest. Partners will use Form 8978 to report adjustments shown on Forms 8986 received from partnerships that have elected to push out adjustments to partnership-related items to their partners.

The IRS provided interim guidance under Internal Revenue Manual 4.31.9 that would provide field examination procedures for centralized partnership audit regime until new IRM is published. The guidance applies to partnerships for taxable years beginning after December 31, 2017, and partnerships that elect into the Bipartisan Budget Act of 2015 (BBA) regime for taxable years beginning after November 2, 2015, and before January 1, 2018. The guidance is effective October 31, 2019. [LB&I-04-1019-010 (Oct. 24, 2019)].