IRS and Tax Practice Symposium - Virtual-5 - Moore - Exam-BBA-Compliance-and-Challenges

5 - Moore - Exam-BBA-Compliance-and-Challenges

Pdf Summary

The presentation explains how the Bipartisan Budget Act of 2015 (BBA) changed partnership audits, generally for tax years beginning in 2018. Under the centralized audit regime, tax adjustments and collections are generally handled at the partnership level.<br /><br />Each audited partnership must designate a Partnership Representative (PR), who has sole authority to act for the partnership and whose actions bind both the partnership and its partners. The PR may extend the statute of limitations, settle, and respond to proposed or final adjustments. The designation applies only to the relevant tax year.<br /><br />A partnership may elect to push an imputed underpayment out to its partners after a final determination, but must do so within 45 days of the Final Partnership Adjustment. Eligible partnerships may instead elect out of the BBA regime on a timely filed return, provided they have no more than 100 qualifying partners and meet partner-type restrictions.<br /><br />The presentation outlines the audit process, including examination notices and the PR’s opportunity to seek Appeals review after the audit. It emphasizes careful attention to procedural rules and clarifying whom counsel represents: the partnership, its partners, or the PR.<br /><br />Recommended early steps include requesting relevant IRS records through FOIA, making a qualified offer to encourage settlement and potentially recover litigation costs, and considering an IRC Section 6603 deposit. Such deposits can suspend interest on a potential underpayment; a partner in a BBA partnership may make one with documentation identifying the partnership, tax year, audit, disputed amount, and estimated share of the adjustment.

Keywords

Bipartisan Budget Act of 2015

partnership audits

centralized audit regime

Partnership Representative

imputed underpayment

push-out election

elect out

statute of limitations

FOIA request

IRC Section 6603 deposit