Tray Beck and Jim Malone Author Article on Changes in Partnership Audit Procedures Under the BBA in 2018 for The Legal Intelligencer
In the December 18, 2017 Legal Intelligencer, Corporate Practice Chair F. Traynor Beck and Tax Controversy Principal James R. Malone, Jr. authored the article, "Changes in Partnership Audit Procedures Call for Changes in Partnership Agreements." The article examines changes that will go into effect for tax years that begin after December 31, 2018 that require every business that is treated as a partnership for federal income tax purposes revise their partnership or operating agreement.
The authors note that the changes, which include the treatment of small partnerships, control over the audit process, and shifting of the tax bill from partners to the partnership, will render existing agreements obsolete and leave partners’ interests unprotected. They go on to explain:
"The changes, part of the Bipartisan Budget Act (BBA) of 2015, were designed to make it easier for the IRS to audit partnerships and to collect the additional taxes it assesses. The new audit procedures will apply to general partnerships, limited partnerships, limited liability partnerships, and multi-member limited liability companies that have elected to be taxed as partnerships."