IRS requests comments on new partnership audit regime

Tax Hot Topics: New partnership audit regimeThe IRS on March 4 issued Notice 2016-23, which requests comments regarding the implementation on the new partnership audit rules enacted as part of the Bipartisan Budget Act (BBA) of 2015. The BBA repeals the current rules for auditing partnerships under the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), as well as rules applying to electing large partnerships (ELPs).

Under the new legislation, the TEFRA and ELP rules are discarded in favor of a new centralized audit approach, by which additional tax is generally assessed and collected at the partnership level. For more information on this new regime, read our Tax Insights.

The notice requests comments on a number of different areas impacting the new audit rules, including the election out of the new centralized audit regime under Section 6221(b), and whether certain passthrough or disregarded partners can remain partners in the partnership and still elect out of the new regime. The IRS is also seeking comments on the designation of the partnership representative and the determination of an imputed underpayment.

Comments are due on April 18, 2016.

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