The State of Partnership Audits

Tax attorney Lee Meyercord was cited in a Tax Notes Federal article recapping the current state of partnership audits at the IRS. The Bipartisan Budget Act of 2015 (BBA) established a new centralized audit process, with the goal of increasing examination rates and compliance. As the new regime has rolled out, one issue preventing the IRS from achieving its desired efficiency has been delays in getting examinations underway. For example, Ms. Meyercord explained that processing Form 8979, "Partnership Representative Revocation, Designation, and Resignation," has been an unexpectedly slow step.

She also commented on implications of the new regime for the partners themselves. Carefully choosing a partnership representative is important, as by the time an audit is opened, the representative named on the return could no longer be a partner, might lack access to the necessary documents or could simply not want the responsibility when the audit begins. As such, Ms. Meyercord recommended selecting representatives that have the same incentives to ensure the correct tax is paid by the correct partners, which frequently means choosing a current partner.

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