The Bipartisan Budget Act of 2015, signed into law on November
2, 2015, raises the federal debt ceiling and lifts mandatory
spending caps on defense and domestic programs. The law also
includes tax provisions that revise partnership audit rules. The
end result of the revised rules is that audits of master limited
partnerships, investment funds and other business entities
organized as partnerships are likely to increase.
Background
Under previous law, partnerships could be audited under three
regimes:
1. Unified audit rules. Under the Tax
Equity and Fiscal Responsibility Act's (TEFRA's) unified
partnership audit rules, the tax treatment of any partnership item
generally is determined at the partnership level. For most
partnerships with more than 10 partners, the IRS conducts a single
administrative proceeding to resolve audit issues regarding
partnership items that are more appropriately determined at the
partnership level than at the partner level. After the
