McDonald Hopkins: This article is an excellent summary of issues that arise under the new partnership tax audit rules. “partners (which for purposes of this alert include members in a limited liability company) need to start discussing the implementation of the new rules now and amend their partnership/operating agreements appropriately before” the rules become effective on January 1, 2018. The article states:
“Key Changes to Prepare For
- In most cases the IRS will be able to assess any additional tax resulting from an audit against the partnership itself – eliminating the need to proceed against individual partners. . . .
- Every partnership will have to appoint a partnership representative who will have exclusive authority to represent the partnership before the IRS and to make every decision relating to certain elections, audits, and settlements with the IRS.
The implementation of these seemingly simple concepts is complex – evident by the nearly 280 pages of regulations and explanation the IRS . . . that only begin to address the issues raised by the new audit rules. This white paper describes . . . the practical impact the rules will have on partnership/operating agreements, and how these agreements will need to be amended.”