The IRS today released an advance copy of Notice 2016-23 that requests comments concerning implementation of new law (enacted November 2, 2015) that replaced the current partnership audit rules with a new “centralized” partnership audit regime that allows for assessment and collection of tax at the partnership level. The comments are due by April 15, 2016.
The new partnership audit procedures are effective for partnership tax years beginning after December 31, 2017—except that a partnership may elect to apply provisions of the new regime for partnership tax years beginning after November 2, 2015, and before January 1, 2018 (in a form and manner set forth by the Treasury Secretary).
Notice 2016-23 [PDF 39 KB] explains that the IRS and Treasury Department intend to issue guidance to implement the new partnership audit regime. Specifically, guidance will be issued to set forth procedures for making the election to have parts of the new partnership audit regime apply to tax years beginning after November 2, 2015, and before January 1, 2018. The IRS notice states that this guidance is expected to be published “in the near future” and that partnerships that want to make this election “should wait until that guidance is published to ensure the election complies with the requirements for making a valid election.”
The IRS in Notice 2016-23 stated that to assist in the development of the future guidance, comments are being requested on 12 items concerning:
Tax professionals have observed that today’s IRS notice does not specifically request comments on one item that has concerned many taxpayers and practitioners—that is, in a tiered-partnership arrangement, whether a partner that is itself a partnership has the ability to pass through the imputed underpayment amounts to its partners.
© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.