Proposed Regulations Lay Out Framework For Future Partnership Audits And Collection

Treasury and the IRS released proposed regulations (REG-136118-15) implementing the new centralized partnership audit regime enacted as part of the Bipartisan Budget Act of 2015 (BBA), which replaces the partnership audit rules of the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA). These proposed regulations are substantially similar to draft proposed regulations that were released publicly by the IRS in January 2017, but were withdrawn before being published in the Federal Register as part of the new Trump administration's initial freeze on regulatory activity.

The BBA is effective for partnerships with tax years beginning after Dec. 31, 2017. In August 2016, the IRS and Treasury issued proposed and temporary regulations on the method by which a partnership could elect into the BBA early. Those regulations are not modified as a result of these new proposed regulations. While some groups have lobbied Congress and Treasury for a delay in the effective date