PRESIDENT OBAMA SIGNS BIPARTISAN BUDGET ACT THAT NOW CHANGES HOW PARTNERSHIPS WILL BE AUDITED AT THE FEDERAL LEVEL10 / 29 / 2015
As part of the Bipartisan Budget Act of 2015, TEFRA's complex partnership audit procedures are eliminated in favor of a more streamlined process, by which the IRS would examine partnership items for a particular year of the partnership and any adjustments would be taken into account by the partnership (and not the individual partners) in the year that the aduit or any judicial review is completed. Partnerships with 100 or fewer qualifying partners can opt out of the new rules, but not if any of their partners are pass-through entities. The new law eliminates use of the TMP and replaces that with a simplified partnership representative that allows the partnership entity to simply designate either a partner or a non-partner to be the representative with sole authority to act for the entity on behalf of the partnership for purposes of audit and judicial proceedings. The statute of limitations looks when the partnership tax return was filed (with extensions) and no longer consider the partner's individual statute of limitations.