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).

On December 19, 2018, the United States Tax Court announced that it had adopted interim and proposed amendments to its Rules of Practice and Procedure pertaining to “Partnership Actions?? under the BBA.  The new rules are at Rules 255.1 through 255.7 and have been published in proposed form to allow for notice and public comment.

The rules generally track the structure of the rules pertaining to partnership actions under TEFRA, while substituting in key definitional and procedural changes as set forth by the BBA.  Among other rules, Rule 255.6 grants the court the power to take such ...

Final Partnership Audit Regulations (December 21, 2018) READ MORE

On November 28, 2018, the Internal Revenue Service (the “IRS??) published a draft version of the instructions for Form 8979, Partnership Representative Revocation, Designation, and Resignation Form (click here).  When read in conjunction with the previously published draft of Form 8979, taxpayers now have a clearer idea as to the process for how to change a previously selected partnership representative or designated individual. 

Per the instructions, only the partnership or the partnership representative may file a Form 8979.  Additionally, both the form and the ...

Summer 2018 proved to be an active time in the implementation cycle of the new partnership audit regime, created under the Bipartisan Budget Act of 2015 (“BBA??). As this is the first tax year in which the new regime will apply to partnership audits, the Internal Revenue Service (“IRS??) issued a plethora of proposed and final regulations to assist taxpayers in navigating the audit process. Partnerships that have not yet reviewed their agreements, should take steps now to comply with the new rules and regulations. With the year coming to a close, we at ...

Rachel Partain and Aaron Esman of Caplin & Drysdale discuss the IRS final regulations intended to clarify the eligibility requirements and selection process for partnership representatives. The authors conclude that the regulations provide partnerships with flexibility in determining their representative needs.  READ MORE

A New Era of Partnership Representation Before the IRS



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