This post, entitled "How to Implement the New Centralized Partnership Audit Regime of the BBA," is the third and final of a series on the new centralized audit regime that came into effect in 2018 under the Bipartisan Budget Act, replacing the old TEFRA procedures with new partnership-level adjustments.  The first article provided an overview of the primary differences between the BBA regime and that of the old TEFRA procedures.  The second article takes a deep dive into the Code and Treasury Regulations, explaining each new provision under the BBA.  This third article wraps everything up in a nice bow and provides guidance for partners and practitioners alike in implementing the centralized audit regime of the BBA. A Fundamental Change The BBA fundamentally changes the way that the IRS conducts partnership audits, assessment, and collection of any resulting income tax deficiencies. Congress enacted these sweeping changes in response to the…

This is the first of a series of three posts on the new centralized partnership audit regime that came into effect in 2018 under the Bipartisan Budget Act, replacing the old TEFRA procedures with new partnership-level adjustments.  This first article provides an overview of the primary differences between the BBA regime and that of the old TEFRA procedures.  The second article takes a deep dive into the Code and Treasury Regulations, explaining each new provision under the BBA.  The third article wraps everything up in a nice bow and provides guidance for partners and practitioners alike in implementing the new centralized audit regime. A New “Centralized” Audit Regime is Created On November 2, 2015, the Bipartisan Budget Act (BBA) effectively repealed the longstanding TEFRA and electing large partnership (ELP) audit procedures, replacing them with a new centralized partnership audit regime. The new procedures fundamentally change how partnership adjustments are determined,…

This is the second of a series of three posts on the new centralized partnership audit regime that came into effect in 2018 under the Bipartisan Budget Act, replacing the old TEFRA procedures with new partnership-level adjustments.  The first article provided an overview of the primary differences between the BBA regime and that of the old TEFRA procedures.  This second article on the new centralized partnership audit regime takes a deep dive into the Code and Treasury Regulations, explaining each new provision under the BBA.  The third article wraps everything up in a nice bow and provides guidance for partners and practitioners alike in implementing the new centralized partnership audit regime. The Default Regime of IRC § 6221(a) and “Electing Out” under IRC § 6221(b) Due to the sharp increase in large entities choosing to be taxed as partnerships, TEFRA’s procedure for making partnership adjustments at the individual partner level…