IRS and Tax Practice Symposium - Virtual-4 - Ortiz - Exam-BBA-Compliance-and-Challenges

4 - Ortiz - Exam-BBA-Compliance-and-Challenges

Pdf Summary

The presentation explains compliance requirements under the Bipartisan Budget Act (BBA) partnership audit regime.<br /><br />A Partnership Representative (PR) uses Form 2848 to authorize an eligible individual to represent the partnership before the IRS. The form requires specific BBA language, and a change in the individual or entity PR requires an updated authorization.<br /><br />Partnership-related items include partnership income, deductions, credits, activities, allocations, liabilities, and partners’ distributive shares. Audit adjustments are classified as negative or positive. Some adjustments—such as net negative or duplicative adjustments—may not produce an imputed underpayment (IU).<br /><br />To calculate an IU, proposed adjustments are assigned to one of four groupings: reallocation, credit, creditable expenditure, or residual. Adjustments may then be subgrouped, netted within the appropriate grouping, and used to determine the Total Netted Partnership Adjustment (TNPA) and resulting IU.<br /><br />Partnerships may request modifications, including amended-return procedures, rate adjustments, tax-exempt treatment, and other options. The IRS generally has 270 days to review a modification request. If the PR disagrees with the determination, the PR has 10 days to explain the disagreement and may later request Appeals for unresolved modification issues.<br /><br />After a Final Partnership Adjustment (FPA) is issued, the PR may elect to push adjustments out to partners by submitting Form 8988 within 45 days, provided the FPA includes an IU. The partnership must furnish Forms 8986 to partners and submit Form 8985 and copies to the IRS. Late statements invalidate the election, leaving the partnership liable for the IU. Partners report their shares through Form 8978 and its schedule.<br /><br />The presentation also describes making an advance IU payment through IRS payment channels, with the partnership’s identifying information, tax form and reviewed year, and the designation “Advance BBA Exam Imputed Underpayment.”

Keywords

Bipartisan Budget Act

partnership audit regime

Partnership Representative

Form 2848

imputed underpayment

Final Partnership Adjustment

Form 8988

Form 8986

Form 8978

advance BBA payment