Partnership Representative

The Bipartisan Budget Act of 2015 (“BBA??) fundamentally changed the rules by which partnerships, and entities taxed as partnerships (such as limited liability companies), interact with the Internal Revenue Service (“IRS??) in an audit or litigation. The new rules apply to partnership tax years beginning on or after January 1, 2018. We outlined these significant changes to the partnership audit rules in a prior Alert. The BBA repealed the 30 year-old TEFRA partnership audit regime, upending or creating uncertainty with respect to previously-settled partnership tax rules ...

The Multistate Tax Commission (MTC), an organization that develops uniform tax laws for states, will soon provide formal feedback to a coalition of industry groups finalizing a model statute regarding partnership audits.

Interested parties have proposed a model uniform statute and regulation and presented it to the MTC for its review.  The proposed model is designed to promote uniformity among states conforming with the new federal partnership audit regime, thereby aiding multistate entities with compliance. The interested parties hope that the MTC, which itself develops ...

The Treasury Department released a memo on June 29, 2017 from the LB&I (Large Business and International Division) and SB/SE (Small Business/Self-Employed Division) providing interim guidance for examiners on how to handle “early elect in?? partnerships who filed returns after November 2, 2015 and before the January 1, 2018.

The memo addresses the temporary regulations (§301.9100-22T) for the “early elect in?? and explains the process of an election which must be made within 30 days of the partnership receiving written notice that their return has been selected for ...

Forthcoming IRS regulations are expected to grant broad powers to those representing partnerships during audits, but these added capabilities could expose representatives to new risks, liabilities and potential misconduct claims from partners.

Partnership agreements will have to be very specific about the decision-making powers of partnership representatives and the process for designating and terminating them, said Charlie Ruchelman of Caplin & Drysdale.

Similarly, representatives will want these agreements to contain indemnification clauses and ensure ...

The Internal Revenue Service is working to develop better ways to find the partners or other investors who owe tax—and represent the most risk—in immensely complex partnership structures.

The agency said it will be focusing big resources on finding what it called “terminal investors??—those responsible for tax—in a new compliance strategy known as a campaign.

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New Procedures, Technology

In the unnumbered document detailing all 13 issues the agency is targeting, IRS said the partnership campaign “focuses on developing new procedures and technology to work ...

The IRS’ proposed partnership audit rules were withdrawn from The Office of the Federal Register following a government-wide executive order from President Donald Trump freezing all new and pending regulations, with some exceptions for health, national security and other emergency situations.

What’s the impact for practitioners and their clients?  Caplin & Drysdale’s Charles Ruchelman says “The regulations are likely to be re-proposed in 60 days, possibly with changes to the original proposals.  Practitioners and their clients should stay tuned to ensure they’re ...

On January 19, 2017, the IRS published proposed regulations regarding implementation of section 1101 of the Bipartisan Budget Act of 2015 (BBA)...