As Seen in Bloomberg BNA
All the investors may need to be on board if a partnership wants to “push out” to its partners the responsibility to pay tax after an audit, an Internal Revenue Service official said.
Within the agency “there are some who think it is all or nothing,” Drita Tonuzi, associate chief counsel for procedure and administration at the IRS, said today at the American Institute of CPAs Tax Division Fall Meeting.
The IRS is working on proposed regulations for the new partnership-auditing regime required by the Bipartisan Budget Act last year, which allows partnerships to choose whether they want to pay tax at the entity level or push it out to the partners. Under a system where all the partners have to do the same thing, one partner may be able to do an end-run around the others by filing an amended return before the decision has been made about how to handle the adjustment.
“We’re concerned about that, that it is all or nothing,” Michael Greenwald, partner at Friedman LLP, said. “And we’re also concerned that if there are some who have already filed amended returns, does that trump the partnership’s ability to push out? That would not be an unreasonable position for you to take, but a position we wish you didn’t.”