Georgia Partnership Audit Bill Withdrawn

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By Chris Marr

A Georgia proposal to conform to the overhauled federal partnership audit rules was withdrawn amid pressure from tax practitioners urging states to wait for the final federal policy to take shape.

A tax subcommittee of the Georgia House voted Feb. 15 to withdraw language related to the partnership audit rules in H.B. 283, the state’s annual bill to update Internal Revenue Code conformity.

Georgia was the third state to introduce legislation seeking to mirror the federal audit regime created under the Bipartisan Budget Act of 2015. Arizona enacted legislation in May 2016. Montana legislators filed a bill in December, but a state House committee tabled it on Feb. 3. Minnesota just introduced a bill Feb. 15.

Details of the federal audit regime remain uncertain, after the Internal Revenue Service released proposed rules for administering the law on Jan. 18 only to see President Donald Trump order the rules withdrawn on Jan. 20. At the same time, tax practitioners are widely hoping for Congress to pass technical corrections legislation to clean up the complex audit regime.

Mary T. Benton, a tax attorney at Alston & Bird LLP in Atlanta, said Georgia’s tax bar is hoping to discuss the best way to revise partnership audit rules with the state’s Department of Revenue between now and the 2018 legislative session.

Now that the bill has been withdrawn, “we have the opportunity to do that,” she told Bloomberg BNA. Benton serves on the Georgia Chamber of Commerce’s business and industry subcommittee and serves as a liaison for the chamber on tax issues.

Coalition Urged Postponing

A coalition of business and tax accounting organizations—including the Georgia Chamber of Commerce, Georgia Society of CPAs and the Council On State Taxation—urged the Georgia Legislature and all states to postpone conformity bills until there was greater clarity at the federal level.

“The group encouraged the subcommittee to shelve the conformity language but consider forming a joint task force to take an in-depth look at the myriad state issues and perhaps come back next Spring with an agreed-upon bill,” Bruce Ely, co-chairman of the American Bar Association’s State and Local Tax Committee Task Force and a tax partner at Bradley Arant Boult Cummings in Birmingham, told Bloomberg BNA. “Let’s just hope that Congress and Treasury get their ducks in a row by year-end.”

COST had urged the Georgia House’s income tax subcommittee to remove the partnership audit language from H.B. 283 in a comment letter dated Feb. 15.

Fred Nicely, senior tax counsel at COST, said he was pleased to see the committee take that advice.

“We don’t see this as something that has an immediate effect in Georgia,” he told Bloomberg BNA. “They can put forth some better legislation next year.”

To contact the reporter on this story: Chris Marr in Atlanta at cMarr@bna.com

To contact the editor responsible for this story: Ryan C. Tuck at rtuck@bna.com

For More Information

Text of H.B. 283 is at http://src.bna.com/mfZ.

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