View Post

A Summary of the New IRS Appeals Procedures under the Centralized Partnership Audit Regime

In Audit, Partnership Tax by Matthew RobertsLeave a Comment

Congress has continuously struggled to find the right procedural mechanism to audit, assess, and collect taxes related to partnerships.  Prior to 1982, partnerships were not audited at all.  Rather, the partners of the partnership were subject to audit, assessment, and collection.   In 1982, Congress substantially modified these existing rules.  Under this new scheme – referred to as TEFRA – …

View Post

“Hot Assets” and the Sale or Exchange of Partnership Interests

In Partnership Tax by Jason B. Freeman2 Comments

When a partner enters into a sale or exchange of their partnership interest, there are often lurking tax surprises—such as unexpected phantom income triggers.  Sales of partnership interests are notoriously fraught with potential tax traps for the unwary.  It is, in fact, even possible to trigger more tax on a sale than one receives in exchange for the interest in …

View Post

New Changes Are Coming to Partnership Withholding

In International Tax, Offshore Tax, Partnership Tax, Tax Reform by freemanlawdevLeave a Comment

Section 13501 of the Tax Cuts and Jobs Act created a withholding requirement on the transfer of non-publicly traded partnership interests[1] by amending §§864(c) and 1446 of the Internal Revenue Code.[2]   Section 864(c)(8) provides that gain or loss from the sale, exchange, or other disposition of a partnership interest by a nonresident alien or foreign corporation is effectively connected with …

View Post

Should You “86” the BBA?

In Partnership Tax by freemanlawdevLeave a Comment

Should You “86” the BBA? 2018 marks a shift in the partnership audit rules. Based on the Bipartisan Budget Act of 2015 (BBA), Congress established a new partnership audit regime, which replaced, among other things, the previous partnership audit rules under the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA). Under the BBA, the new audit regime took effect …

View Post

The New Partnership Audit Rules: An Expansive Scope and Penalty Defenses

In Partnership Tax by Jason B. FreemanLeave a Comment

The Bipartisan Budget Act of 2015 (“BBA”) was enacted into law on November 2, 2015.  Section 1101 of that act repeals the current TEFRA and Electing Large Partnership rules governing partnership audits and replaces them with a new centralized partnership audit regime that, in general, assesses and collects tax at the partnership level. On January 19, 2017, the Treasury released …

View Post

Why (Nearly) Every Partnership Agreement Should be Amended

In Partnership Tax by Jason B. FreemanLeave a Comment

The new partnership audit rules generally take effect for tax years beginning in 2018—partnerships and their partners will ignore them at their peril.  The new rules, enacted under the Bipartisan Budget Act of 2015 (the “BBA”), dramatically change the regime that currently governs partnership tax audits, assessments, and collection.  The changes will impact not only how tax adjustments are assessed, …

Major Changes are in Store for the Partnership Audit Rules

In Partnership Tax, Uncategorized by Jason B. FreemanLeave a Comment

The partnership audit rules are in for a major overhaul. The recently-enacted Bipartisan Budget Act of 2015 (BBA) is replacing the existing partnership audit framework with a new regime. The new rules, however, are not immediately mandatory—they will generally apply “to returns filed for partnership taxable years beginning after Dec. 31, 2017.” So, for many partnerships, now is the time …