The Bipartisan Budget Act of 2015, enacted into law November 2,
2015, significantly changes the current Internal Revenue Service
(IRS) audit rules that apply to partnerships and entities taxed as
partnerships for U.S. federal income tax purposes by repealing and
replacing the audit rules established under the Tax Equity and
Fiscal Responsibility Act of 1982 (TEFRA) with a new set of
partnership audit rules. Currently under TEFRA, the IRS makes audit
adjustments to partnership returns at the partnership level, and
assessment and collection of any resulting tax deficiencies from
such partnership adjustments occurs at the individual partner
level. Under the new partnership audit rules, IRS audit adjustments
will also be determined at the partnership level, but any resulting
tax deficiencies will now be assessed and collected at the
partnership level, unless the partnership elects out of the new
rules or elects to pass the audit adjustments out to its
partners.
