Lisa M. Starczewski, a shareholder in the tax section of Buchanan, Ingersoll & Rooney, in a new podcast, takes listeners on a detailed walk through the most important aspects of the new partnership audit rules and proposed regulations.
The new rules are effective for audits of returns filed for tax years beginning on or after January 1, 2018. That is less than two months away!
This will be a new centralized audit regime for all entities that are taxed as partnerships. This could be a dramatic change to the partnership audit process, and could change the amount of tax liability ultimately paid and the persons bearing the economic consequences of that liability.
Starczewski said she gets the most questions about the new requirement for a partnership representative. This is a new concept. The partnership representative will have unfettered authority to bind the partnership and the partners. There are lots of questions about who it should be, what kind of protections there should be in the partnership agreement, and other unknowns.
It is important to be proactive because there are traps for the unwary, she said.
Practitioners should also think about what needs to change in their clients’ agreements. There should be provisions in place that address the rules. At least designate a partnership representative in the agreement or put in their responsibilities and how to navigate the process, she said.
Starczewski says it is very important for practitioners to think about how they will draft new agreements or amend old ones. For now, practitioners should study the rules and educate their current and new clients.
The podcast is available at http://src.bna.com/t3Y.
Starczewski has also written a special report on the partnership audit rules, available at https://www.bna.com/new-partnership-audit-m73014462416/.
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