Partnership Representatives: New IRS Final Regulations Under Section 6223 and Challenges for Pass-Through Entities

New Audit Procedures; Disregarded Entities as Partnership Representatives; Termination and Replacement

Note: CPE credit is not offered on this program

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


Conducted on Wednesday, January 30, 2019

Recorded event now available

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Program Materials

This CLE webinar will provide tax counsel and advisers guidance to the recently issued final regulations on the designation of partnership representatives for purposes of the centralized audit rules. The panel will discuss the new regulations under Section 6223 and the impact on pass-through entities, new IRS procedural and administrative processes for audits, the use of disregarded entities as representatives, notice requirements, and potential issues in maintaining compliance.

Description

On Aug. 6, 2018, the IRS finalized regulations governing the designation of partnership representatives. The final rules make some significant changes to previously proposed regs creating a ripple effect to partnership designations, operating agreements and potential tax liability, so counsel and advisers must have detailed knowledge of the scope of a partnership representative's role to avoid adverse tax consequences.

Initial regulations confused practitioners who could not grasp the extent of the Section 6223 requirement that partnerships designate a representative with sole authority to act on behalf of the entity in matters related to IRS examinations. As a result, many partnerships modified existing partnership agreements and implemented a variety of compliance mechanisms to avoid unintended tax consequences in case of an IRS audit.

The final regulations provide clarity on essential items of concerns, including allowing a disregarded entity to serve as a representative of the partnership and the removal of the capacity-to-act requirement for designated representatives along with extensive guidance on removing or replacing a partnership representative. The regs provide a roadmap for tax professionals to advise partnership clients on ensuring that the partnership representative can appropriately respond to the partnership's potential tax issues.

Listen as our experienced panel provides a thorough and practical guide to the IRS final regulations on partnership representatives under Section 6223, new IRS procedural and administrative processes for audits, notice requirements, and other high-priority considerations for partnerships.

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Outline

  1. Overview of the IRS partnership audit regime
  2. Selection and responsibility of partnership representives under Section 6223
  3. IRS final Section 6223 regulations
  4. Designating a disregarded entity as partnership representative
  5. Failure to designate an eligible party as partnership representative
  6. Terminating/replacing partnership representative
  7. Best practices and planning considerations for counsel in light of the final regulations

Benefits

The panel will review these and other key concepts:

  • What are the fundamental changes that the final regulations make in Section 6223?
  • How does the change in the "capacity-to-act" provision impact the selection of partnership representative?
  • Changes to the provision allowing the IRS to designate a representative if the partnership has not made an eligible selection
  • How to change a partnership representative after the IRS has contacted a partnership about a possible audit?
  • What are the rules governing the use of disregarded entities as partnership entities?
  • Planning considerations for partnership agreements and transactions in light of the final regulations

Faculty

Moore, Guinevere
Guinevere M. Moore

Partner
Johnson Moore

Ms. Moore serves as an attorney and a professional partnership representative to her clients. She has over a decade of...  |  Read More

Partain, Rachel
Rachel L. Partain

Member
Caplin & Drysdale

Ms. Partain's practice focuses on representing high-net-worth individuals (HNWIs), corporations, and TEFRA and...  |  Read More

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