New IRS Partnership Audit Rules for Tax Counsel: Preparing for Massive Changes Ahead

Partnership Agreement Drafting Considerations, Commercial Impacts, Transfers and Admissions of New Partners

An encore presentation featuring live Q&A

Recording of a 90-minute CLE/CPE webinar with Q&A


Conducted on Wednesday, March 9, 2016

Recorded event now available

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Program Materials

This CLE/CPE webinar will provide tax counsel with a critical first look at the drafting, commercial and compliance implications of the new IRS regulations and procedures for auditing partnerships. The panel will describe the new partnership audit processes in detail, outlining the changes that will facilitate IRS audits of partnerships. The speakers will offer concrete suggestions on partnership agreement drafting provisions and other changes to partnership operations in preparation for the new audit processes.

Description

Among the most far-reaching aspects of the Bipartisan Budget Act of 2015, signed into law Nov. 2, 2015, is a significant change to the way the IRS audits partnerships. The new rules will replace the current TEFRA rules and allow the IRS to audit partnerships at the entity level and assess and collect taxes against the partnership, unless the partnership elects out of the new regime. The new legislation will impact the formation and operations of partnerships, as well as disposition of partnership interests and admission of new partners.

The new law is designed to facilitate IRS audits of partnerships, thus leading to more audit frequency, and completely overhauls the Service’s approach to partnership examinations. The new audit approach will have significant effects on the drafting of partnership agreements. Tax counsel will have to consider issues such as protection of minority partners and specifying which party will bear the cost of taxes imposed at the partnership level.

The law applies to partnerships with over 100 partners, as well as partnerships which have another partnership as a partner. While the legislation does not go into effect until 2018, tax counsel should evaluate existing partnership agreements now to prepare clients for the commercial, operational and compliance impact of the new law, as well as incorporating the law’s provisions for all new partnership agreements.

Listen as our expert panel provides a critical first look at the impact of this far-reaching legislation. The panel will offer insights on how to address the changes brought about by the new audit processes and detail the commercial and operation concerns arising from the legislation.

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Outline

  1. Detailed discussion of new audit rules
  2. Drafting and modifications required for existing partnership agreements
  3. Alternate procedures for partnerships seeking to opt out of entity-level assessments
  4. Impact on transfers of partnership interests and admission of new partners
  5. Procedural protections for minority partners

Benefits

The panel will discuss these and other critical issues concerning the new IRS partnership audit processes:

  • How the entity-level change facilitates IRS audits
  • Elimination of concept of “tax matters partner” and requirement of “tax representative” with authority to represent the partnership in an audit
  • Commercial and transactional issues arising from the new law
  • Addressing concerns through drafting or amendment of partnership agreements

This is an encore presentation with live Q&A.

Faculty

Martin, Heath
Heath Martin

Davies Ward Phillips & Vineberg

Mr. Martin's experience includes partnership drafting and defending  individuals and businesses in federal and...  |  Read More

Jonathan Stein
Jonathan Stein

Atty.
Pryor Cashman

Mr. Stein advises on corporate, partnership, and international tax issues. He has represented buyers and sellers in...  |  Read More

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