Partnership Representative

The IRS provided interim guidance under Internal Revenue Manual 4.31.9 that would provide field examination procedures for centralized partnership audit regime until new IRM is published. The guidance applies to partnerships for taxable years beginning after December 31, 2017, and partnerships that elect into the Bipartisan Budget Act of 2015 (BBA) regime for taxable years beginning after November 2, 2015, and before January 1, 2018. The guidance is effective October 31, 2019. [LB&I-04-1019-010 (Oct. 24, 2019)].

The IRS office of Appeals on October 18, 2019, released interim guidance on application of the new Bipartisan Budget Act of 2015 (BBA) partnership audit procedures.  The new guidance supplements previous interim guidance AP?08?0319?0005, which was issued on March 25, 2019.  The April 25 guidance set procedures for Appeals employees to follow in screening, assigning, and referring BBA partnership cases.

The October 18 guidance includes the following key points:

• Election into BBA Regime.  Partnerships with taxable years beginning after November 2, 2015, and before January 1, 2018 ...

Partnerships and LLCs that applied to extend their deadline for filing Form 1065 for the 2018 tax year have until September 16, 2019 to submit their return. This deadline is fast approaching, and given recent changes to the partnership audit process, it is important for partnerships to ensure that they can meet their filing requirements by this date. In particular, the Bipartisan Budget Act of 2015 now requires partnerships to appoint a “partnership representative,?? who will have the power to bind the partnership and all partners to any audit determinations. This representative ...

Form 1066, U.S. Real Estate Mortgage Investment Conduit (REMIC) Income Tax Return, updated to allow taxpayers, under Designation of Partnership Representativ, to enter all 0s (example: 00-0000000 or 000-00-0000) for the TIN of the partnership representative and designated individual (if applicable).  A preparer tax identification number (PTIN) or centralized authorization file (CAF) number may not be used as a TIN to designate a partnership representative or designated individual.  The IRS noted that the instructions will reflect this change in the next revision of the form. 

Form 8981, Waiver of the Period Under IRC Section 6231(b)(2)(A) and Expiration of the Period for Modification Submissions Under IRC Section 6225(c)(7), and Form 8984, Extension of the Taxpayer Modification Submission Period Under Section 6225(c)(7), released March 14 to reflect changes to partnership audit rules under the 2015 BBA.

Form 8981 allows the partnership representative to waive the restriction on mailing the notice of final partnership adjustment (FPA) described in tax code Section 6231(b)(2)(A). Form 8984 is used to request an extension of the 270-day modification ...

Attorneys in Caplin & Drysdale's Tax Controversy Group -- Members Charles Ruchelman and Rachel Partain and Associate Aaron Esman -- co-authored the article "Planning For Partnership Representatives In The New Year" for Law360.  To view the full article, please visit this link.  You can also visit this link to view the article on Law360's website (subscription required).