New IRS audit rules target partnerships, creating new risks for partners

April 14, 2016
The State Journal

The Bipartisan Budget Act of 2015, signed into law by President Barack Obama Nov. 2, 2015, completely changed the manner in which the Internal Revenue Service will conduct partnership audits.

The new rules impose an entity-level tax liability for partnerships in the event that an IRS audit determines that additional taxes, interest or penalties are owed — a dramatic change from prior law. Historically, the IRS could only collect additional assessments from the individual partners, not directly from the partnership.

The new audit rules will be effective for taxable years beginning on or after Jan. 1, 2018, however, partnerships may elect to apply them sooner. The effective date has been delayed in order to allow the IRS to draft regulations implementing the new rules.

To read the full article, click here.