According to The Tax Advisor, tax planners should consider the effects of the centralized partnership audit regime enacted as a component of the Bipartisan Budget Act of 2015. Despite the fact that audit procedural issues do not usually seem relevant when tax planners advise on the purchase/sale of a partnership interest, the audit regime should be analyzed for at least three reasons:
- As governed by the default rule of the audit regime, “the IRS now has authority to determine, assess, and collect tax on partnership underpayments at the partnership level;”
- A single individual, often the partnership representative, “has the exclusive authority to represent, negotiate, and bind the partnership at all stages of a partnership proceeding subject to the BBA audit regime;”
- Partners “do not have a statutory right to notice or to participate in the partnership proceeding.”
