Montana Committee Postpones Federal Partnership Audit Bill

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By Tripp Baltz

The Montana House Taxation Committee won’t take up a bill (H.B. 47) that would have conformed state law to the new IRS partnership audit regime.

The committee put the the bill on hold late Feb. 3. The bill addressed new state reporting requirements for partnerships having to make adjustments to a federal return after an audit, said Rep. Zachary Brown (D), sponsor of the measure. It included language on paying adjustments and penalties at the partnership level, he said.

Brown told Bloomberg BNA Feb. 6 that proponents of the bill in the Legislature are going to consider a study bill “that would require an interim committee to track the issue leading up to the 2019 session.”

While the bill was pending in the committee, several multistate advocacy groups cautioned legislators about enacting changes in the law when so many questions remain about the federal partnership audit legislation approved as part of the Bipartisan Budget Act of 2015. They urged Montana and other states to take a “wait-and-see” approach.

It is expected that Congress will, perhaps in the first half of 2017, pass a technical corrections bill (H.R. 6439, S. 3506) addressing the unanswered questions about new federal partnership audit procedures. Arizona enacted a conformity bill in 2016 and Minnesota is mulling a similar effort this year.

As part of a Jan. 20 executive order, President Donald Trump ordered that the Internal Revenue Service’s proposed implementing rules for the new regime be withdrawn.

Jane Egan, executive director of the Montana Society of CPAs in Helena, told Bloomberg BNA earlier this month that it is possible another partnership bill will be introduced in Montana this year. “I would be surprised if the department waited,” she said. “I think something else is going to come out, but I don’t know what it will look like. They are not just going to let this go. They are very passionate about this partnership issue.”

Proponents had pushed for conformity legislation because the first federal audits likely will happen in 2019, when the Legislature next meets.

To contact the reporter on this story: Tripp Baltz in Denver at abaltz@bna.com

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

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