ABA Tax Asks IRS to Nix Audit Rule in Final Partnership Regs

Tax attorney Lee Meyercord spoke with Law360 about proposed Internal Revenue Service (IRS) regulations that would change partnership audit procedures. One of the changes concerns the statute of limitations for partnership adjustments. Under the Bipartisan Budget Act of 2015 (BBA), the statute of limitations for partnership adjustments is determined only at the partnership level, whereas under the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), partnership adjustments can be made at either the partner or partnership level. The proposed IRS rule would allow adjustments at either level like TEFRA. Ms. Meyercord joined other practitioners in preparing a letter from the American Bar Association Tax Section calling for various changes to the IRS proposals, including removing this provision.

"While the BBA was supposed to be a departure from the TEFRA-era rules, this proposal goes back to the TEFRA rule of allowing adjustments if either the partner or partnership statute of limitations is open," she said. "Practitioners (myself included) think this is contrary to congressional intent and the rule should be withdrawn."

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