Daily Tax Report: State provides authoritative coverage of state and local tax developments across the 50 U.S. states and the District of Columbia, tracking legislative and regulatory updates,...
Sept. 27 — An ABA task force has asked the Multistate Tax Commission to consider model legislation to facilitate state conformity with the new federal partnership audit regime.
During its inaugural Sept. 27 teleconference, the work group spearheading the MTC's Partnership Informational Project heard from an ABA Tax Section, State and Local Tax Committee task force addressing the state implications arising from the new federal law.
Bruce P. Ely, co-chairman of the task force, offered an overview of a memorandum provided Sept. 15 to the MTC that generally urges states' conformity and adoption of the federal rules.
“I think it's a win-win for the states,” Ely said. “If the feds are projecting $9.3 billion or $10 billion revenue pick-up, then clearly the states would see this as maybe not found money, but revenue that would come in the door almost automatically” with increased IRS audit activity and increased taxpayer compliance.
Ely also proposed a collaborative effort including task force members and the MTC on a model revenue agent report (RAR) statute—legislation that the task force considers “part and parcel” of the project.
The Bipartisan Budget Act of 2015 (Pub. L. No. 114-74), signed in November 2015, seeks to simplify partnership audits by providing for assessments and adjustments at the partnership level. The IRS plans to propose implementing regulations by the end of the year. Last month, it released temporary regulations (T.D. 9780) on the option to elect-in early.
However, legislation proposing technical changes to the law's partnership audit regime could also surface before year's end, which could impact the IRS rules or state conformity statutes (2016 Weekly State Tax Report 13, 8/19/16).
The MTC had established a work group to address several questions related to the new federal rules. During the MTC's annual meeting in Kansas City, Mo., in July, the Uniformity Committee approved a drafting project to start developing model language for states (2016 Weekly State Tax Report 11, 7/29/16).
Ely said the task force consists of American Bar Association tax section members, including officers from the Council On State Taxation and the Tax Executives Institute. The task force has partnered with the American Institute of CPAs on the project.
In the memorandum, the task force encourages states to conform to the federal rules and adopt the federal elections, “particularly with respect to a partnership that opts-out of the federal rules or a partnership that opts-in early.” Two exceptions to this general rule include the “push-out election” and the “pay up election,” which the task force believes “would increase compliance by reducing administrative burdens.”
So far, Arizona is the sole state that has enacted legislation largely following the federal partnership audit regime. Ely said the task force considers the Arizona statute a “good start,” but said “there's some work to be done” on it.
The MTC work group plans to meet weekly every Tuesday afternoon, at 1 p.m. EST. A list will be maintained to capture issues raised.
MTC staff will conduct a survey of states, seeking feedback on the urgency in state legislative bodies to address the issue. Staff will also reach out to an Arizona practitioner to discuss the state statute with the work group.
To contact the reporter on this story: Jennifer McLoughlin in Washington at email@example.com
To contact the editor responsible for this story: Ryan D. Tuck at firstname.lastname@example.org
Information on the MTC's Partnership Informational Project is at http://www.mtc.gov/Uniformity/Project-Teams/Partnership-Informational-Project.
The ABA task force memo is at http://src.bna.com/iVZ.
Copyright © 2017 Tax Management Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)