IRS Seeks Feedback on New Partnership Audit Rules

The Internal Revenue Service is looking for comments on the new partnership audit rules that was enacted as part of Congress’s budget deal last December.

Notice 2016-23 requests comments on the new partnership audit regime enacted as part of the Bipartisan Budget Act of 2015 (BBA). Section 1101 of the BBA creates a new regime for auditing all partnerships effective for tax years beginning after Dec. 31, 2017, although some partnerships can elect into the regime prior to that date.

The new rules provide a more centralized partnership audit regime that, in general, assesses and collects tax at the partnership level. The notice requests comments by April 15, 2016 from the public to help implement the new rules and to assist in the guidance process.

The new regime repealed the unified partnership audit and litigation rules that were enacted as part of the Tax Equity and Fiscal Responsibility Act of 1982, also known as TEFRA, along with the Electing Large Partnerships, or ELP, provisions (see Prepare Now for the Impact of New Partnership Audit Rules).