Partner Representatives And The New Partnership Audit Regime

Commencing in January 2018, the I.R.S. began a new centralized audit regime with respect to partnerships. It replaces the concept of a "Tax Matters Partner" with a "Partnership Representative." Although in our practice we mostly see the impact in connection with limited liability companies ("L.L.C.'s") – which are taxed as partnerships – the new rules are mandatory (subject to certain opt-out rights) for all partnerships, L.L.P.'s, and L.L.C.'s.

TA X MATTERS PARTNER

Prior to January 1, 2018, when a group formed a multi-member L.L.C. in the U.S., it was required to designate one of the members of the new company as the Tax Matters Partner. For many people outside the U.S., the designation caused concern. Frequently, the members did not want to be on record with the I.R.S. in manner distinct from the entity itself, and often, they did not understand what the title entailed.