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Partnership Agreements

Posted by Claud Posted on Nov 27 2018

New IRS audit rules apply for partnership taxable years beginning after December 31, 2017. Although the partnership may elect out of the new rules on a year-by-year basis, very few partnerships qualify for the election. Highlights of the new rules are a tax on “imputed underpayments” that is assessed and collected at the partnership level, with exceptions. Also, the “Tax Matters Partner” is replaced with new “Partnership Representative”, who need not be a partner.

 

Under the current rules, less than 1% of partnerships were audited. IRS could increase partnership audits under these new rules with the added ability to collect tax from the partnership.

 

If you haven’t already, please review your partnership (or LLC) agreement with your attorney to ensure it addresses the significant changes to the partnership audit regime that will generally apply to partnership returns filed after 2018. 

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