Changes are coming to how the IRS audits and collects tax from partnerships and the tax attorneys at Gardere are developing solutions to prepare the Firm’s clients.
In addition to altering partnership audit defense and litigation procedures, the new default rules will alter the economic consequences of partnership audits and the rights of individual partners to contest adjustments. These changes will alter various transactional considerations moving forward for a wide range of industries and businesses, including private equity funds, real estate partnerships, many middle-market businesses, closely-held businesses and family-limited partnerships. However, the full scope and operation of the new rules will not be known until the IRS releases regulations.
After the IRS releases regulations, it will likely be advisable for all entities classified as federal partnerships (including general partnerships, limited partnerships, limited liability partnerships and limited liability companies) to revisit and amend their governing documents. The tax attorneys at Gardere are closely monitoring the situation and will continue to provide updates to the Firm’s clients.
For further detail on the new statutory framework, see New Partnership Tax Audit Rules as recently published in Texas Tax Lawyer by Michael J. Donohue, a tax partner at Gardere.