Centralized Partnership Audit Regime—What Me Worry?

By Cameron L. Hess¹

I. OVERVIEW

Legislatively enacted in 2015, Congress delayed the effective date of the Centralized Partnership Audit (CPA) regime to partnership tax returns having fiscal (or calendar) years beginning after December 31, 2017 to help the Treasury Department to adopt guidelines, and, presumably, give the taxpayer community time to adjust to those guidelines.²

The result was the replacement of the former Tax Equity and Fiscal Responsibility Act (TEFRA) partnership audit examination rules.³ Implemented are revised audit examination procedures that, in a simplistic sense, shift major portions of the audit examiner’s work to the partnership representative. More precisely, the CPA regime simplifies the Internal Revenue Service’s (the Service) assessment and collection of tax from proposed partnership audit adjustments. Key provisions, which include March 2018-year legislative changes⁴ and changes in response to practitioner comments, are outlined below, but for some will be a new ball game. Arguably, resolving some issues representatives will encounter during audit may unfortunately prove insurmountable.