By: Amanda Wilson
The budget bill introduced yesterday includes a proposal to revamp/streamline how partnerships are audited. Specifically, it would repeal the much maligned TEFRA (1982 Tax Equity and Fiscal Responsibility Act) rules.
The overall effect would mainly be that the electing large partnership rules would apply to most partnerships, including partnerships with a trust or pass-through entity as a partner. It also gets rid of the tax matters partner (a position that can only go to a partner), and provides for a partnership representative that may be either a partner or non-partner. This representative would be designated by the partnership with the sole authority to act on behalf of the partnership for partnership audit and judicial proceedings. Finally, the statute of limitations would only look at the time that the partnership return was filed and any extensions granted by the partnership, rather than the partners’ individual statutes of limitations (doing away with the Rhone-Poulenc problem).
Stay tuned for further developments!