Signed into law in November of 2015, the Bipartisan Budget Act of 2015 made sweeping changes to the way partnerships are audited. These changes apply for tax years beginning after Dec. 31, 2017 and are intended to simplify the audit process for the Internal Revenue Service (IRS).
The most significant change allows the IRS to assess any change from an audit, and collect the resulting tax effect, at the partnership level. Under previous law, the IRS would follow the adjustment through to the individual partners to collect any changes in tax. The payment made by the partnership is a nondeductible expense.
What can be done?
Without these options, it is possible for a partner in the current year to recognize the adjustments from an audit of a period in which they were not a partner.
Because of the potential adverse consequences, it is important to:
This Act contains other provisions not discussed in this article. Please consult your tax professional at UHY Advisors in one of our many locations for more details.
Wednesday, April 24, 2019 | 7:30 AM – 9:30 AM EDT | The Hartford Club