The IRS has launched its Bipartisan Budget Act (BBA) Centralized Partnership Audit Regime website. Under the BBA, which is generally effective for tax years beginning January 2018, the IRS generally assesses and collects any understatement of tax at the partnership (v. individual partner) level. The new website is intended to be a “one-stop location” for anything BBA-related, including regulations and other guidance and instructions related to the Partnership Representative (PR), electing out of the centralized audit regime, Administrative Adjustment Requests (AARs), and what to expect during a BBA administrative proceeding. The IRS hopes that taxpayers “will visit the website often” for information, including electronic submission instructions of forms related to a BBA examination (when those instructions are available). The Service has also developed a flowchart in its efforts to explain this program. It provides a reminder that a partnership can opt to push out the adjustment with the associated tax to the partners on record for the audited tax year by issuing adjusted Forms K-1 to them. The partners would then take the changes into account on their own tax returns. Partnerships with 100 or fewer partners can opt out of these audit rules. IRS Pub. 5388 provides a “one-page road map” on the process, time frames and more.
Dr. John Connors, JD, CPA, LLM
Tax Educator’s Network, Inc.
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