IRS Changes Audit Procedures for Partnership Returns
Starting in 2018, the Internal Revenue Service is changing how they collect federal taxes from taxable income changes resulting from an IRS examination of a partnership return. In the past, any changes to a partnership’s taxable income after an examination were passed through to members and they were responsible for amending their tax returns.
For partnerships with tax years beginning on January 1, 2018 or later, any changes in taxable income will be calculated at the highest individual or corporate rate for the year under examination and the partnership will then be responsible for paying the tax, interest and penalties.
Certain partnerships may be able to elect out of this new simplified tax collection process. It will be an annual election made on the timely filed tax return and will be the decision of the members.
Please contact our office if you would like more details regarding the IRS’ Centralized Partnership Audit Regime.