The Bipartisan Budget Act of 2015 (BBA) makes significant changes to partnership audit and adjustment procedures. BBA repeals the present-law Tax Equity and Fiscal Responsibility Act (TEFRA) and Electing Large Partnership rules that govern IRS audits of partnerships.
National Tax Accounting Services’ most recent publication, BBA - Tax accounting under the new partnership audit and adjustment rules, provides an overview of the tax accounting for partnerships and responses to a few key questions on the tax accounting for partnerships that have arisen as a result of the enactment of BBA.
BBA will be effective for audits of partnership taxable years beginning after December 31, 2017. Partnerships should continue to monitor statutory and regulatory developments and work closely with their advisors to plan for implementation of BBA. Ongoing developments will need to be monitored carefully as the government’s interpretation of the BBA audit rules and possibly even the statute itself could change. For example, it currently remains uncertain whether the push-out election is available to an upper-tier partnership that receives a push-out statement from a lower-tier partnership. This and other items may be impacted by future regulations. Partnerships will need to continue to monitor developments at the state level as well.