On November 2, 2015, Congress passed the Bipartisan Budget Act of 2015 (BBA),¹ which enacted a new centralized audit regime (regime) that applies to all entities taxed as a partnership for taxable years starting after December 31, 2017. The most important feature of the regime is that it refocuses all audit activities on the partnership itself instead of the partners, including requiring assessments of tax deficiencies and collections at the entity level. The BBA identified several issues for which the Treasury Department and Internal Revenue Service (IRS) were to promulgate regulations to carry out the statutory objectives. This was a significant undertaking for Treasury and IRS, as the BBA flipped partnership taxation from a “flow-thru” construct to one in which the partnership would be primarily liable for any additional income tax due after audit. The congressional goal was to reduce the administrative burdens placed on IRS for audits of partnerships, and move that burden to the partnerships themselves.²
Follow the link to read more of the article,”New Partnership Audit Regime: Opt-Out, Push-Out, or Pay-Up?“, featured in The Florida Bar Journal, Volume 91, No. 10 from December, 2017, co-authored by Gregory Marks, partner at Shumaker, Loop & Kendrick, LLP.