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New partnership audit rules create new burdens and challenges

RFP
New audit partnership rules create new burdens and challenges The recently enacted new rules for auditing and assessing tax on partnerships create many new considerations for partnerships as well as entities and individuals that are partners in a partnership.

The legislation shifts much of the burden of assessing tax after an audit from the IRS to partnerships and potentially shifts liability to the entity level. Partnerships and partners will need to make many important decisions in light of the new rules on issues, such as the following:

  • Designating the partnership representative
  • Opting out of the new rules
  • Barring partners that would prevent the partnership from opting out
  • Electing to pay assessments at the entity or partner level
  • Assigning economic burden of partnership-level assessments
  • Assessing potential entity-level liability for financial accounting purposes
Tax Insights 2015-05 covers the new rules in detail and discusses important considerations for both partners and partnerships.

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