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US Accountants Want Delay To Partnership Audit Comments

by Mike Godfrey,, Washington

16 March 2016

The American Institute of Certified Public Accountants (AICPA) has asked the US Internal Revenue Service (IRS) to extend the deadline for submitting comments on the new regime for auditing partnerships, which was enacted as part of the Bipartisan Budget Act of 2015 (BBA).

The new regime was one of the BBA's measures to raise additional revenue to fund part of a two-year budget. The IRS has previously experienced serious difficulties in auditing large partnerships, such as private equity and hedge funds, largely because of their structural complexity.

Partnerships are presently taxed on a pass-through basis, with income reported on partners' income tax returns. However, according to Section 1101 of the BBA, and with effect for tax years beginning after December 31, 2017, partnership audit rules will be streamlined into a single set of rules for auditing partnerships and their partners at the partnership level.

Under this streamlined audit approach, the IRS will examine the partnership's items of income, gain, loss, deduction, credit, and partners' distributive shares for a particular year of the partnership. Any adjustments will be taken into account by the partnership (not the individual partners).

The agency recently issued Notice 2016-23, which solicited responses to a series of specific questions related to the new partnership audit regime by April 15, 2016. In a March 11 letter to the IRS, the AICPA has now requested that the deadline for responses be extended until May 31, 2016, "to allow our members time to review the issues raised by the Notice and provide thoughtful and meaningful feedback to the IRS."

"We understand the need for moving this process forward quickly. However, this deadline falls just three days before the filing deadline for partnership, individual, estate and trust tax returns covering calendar year 2015," Troy Lewis, Chair of the AICPA Tax Executive, pointed out in the letter.

TAGS: compliance | tax | investment | business | private equity | tax compliance | law | accounting | hedge funds | audit | Internal Revenue Service (IRS) | tax authority | legislation | transfer pricing | United States | Tax

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