CPAs: Congressional action needed to address new IRS partnership audit rules

Congress should do more to address gaps in partnership audit rules it enacted in a law passed last year, the American Institute of CPAs (AICPA) said.

In an Oct. 7 comment letter, the AICPA focused on provisions of the Bipartisan Budget Act of 2015, which centralized the ability of the Internal Revenue Service (IRS) to audit a partnership. The law is not scheduled to go into effect until 2018, but it has spurred concern among larger partnerships that they will have to make adjustments to protect their assets.

{mosads}While the AICPA’s letter said it is “in agreement with the commentators who believe that certain gaps and uncertainties are significant and warrant additional Congressional action,” it said it would submit separate comment letters to the appropriate congressional committees.

The AICPA recommended expanding the list of partners eligible to opt out of the partner audit regime to include certain smaller partnerships like IRAs, tax-exempt organizations under tax code section 501(c) and certain single-member LLCs.

“The letter stated that the AICPA’s recommendations are designed to balance the IRS’s desire to simplify the assessment and collection of audit adjustments from complicated multi-tier partnership structures with the tax code’s basic principles of fairness and equity,” the AICPA said in a statement.

The group also recommended the IRS not require a partnership that opts out of the regime to name a partnership representative. The 2015 act allows the IRS to designate one partnership representative in order to lessen the burden of the agency to keep all relevant parties informed.

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