On November 2, 2015 – effective for tax years beginning
January 1, 2018, new rules pertaining to the Internal Revenue
Services ("IRS") tax examinations of
partnerships (or other entities taxed as a partnership for U.S.
federal income tax purposes) have entered into force (the
"New Audit Rules"). Partnerships and
partners that will be filing their 2018 tax return, should pay
attention to the New Audit Rules, as such rules may have a material
effect on them.
Partners are advised to carefully review and revise their
partnership's operating agreement to address the New Audit
Rules, as described below.
In general, until and including the 2017 tax year,
partnerships' tax returns were examined by the IRS at the level
of each partner with respect to each such partner's allocable
share of the partnership income, deductions and credits. As of the
2018 tax year, the general rule is that partnership examinations
shall be managed at the partnership level by a sole
"partnership
