Page 168 - The TEFRA Partnership Audit Rules Repeal:

ALI CLE Live Video Webcast / “The TEFRA Partnership Audit Rules Repeal: Partnership and Partner Impacts” June 7, 2016, Jerald David August and Terence Floyd Cuff
audit is binding on the partnership and the partners, subject to the partnership’s ability to context matters in Tax Court, District Court, or the Court of Federal Claims. A partner is not permitted to contest adjustments in a collection due process hearing.
The GENERAL EXPLANATION OF TAX LEGISLATION ENACTED IN 2015 (JCS-1-16, March 2016) contains this example:
For example, assume that a partnership is audited with respect to taxable year 2018. One of the adjustments reflects the partnership’s omission of income of $1,000 in calculating partnership taxable income. Following receipt of the notice of final partnership adjustment, the partnership decides not to litigate. The partnership elects to issue statements to reviewed year partners [partners in the year under audit], whose tax is increased for the partner’s taxable year that includes the date of the statement, 2021. Reviewed year partner A’s adjustment is $100, resulting in an increase in tax of $35, but partner A does not pay the increased amount of tax. The time for the partnership to litigate the adjustments has elapsed and the notice of final partnership adjustment is a final determination. Prior to any levy on any property or right to any property of partner A in connection with collection of the $35 tax, partner A has the right to and is afforded the opportunity for a hearing (the collection due process hearing). At the hearing, partner A may not raise the issue of whether the $1,000 (or A’s $100 share of it) was properly includable in determining partnership taxable income, because a final determination with respect to the issue was made in a proceeding brought under the centralized system. The result is the same if the partnership had decided to seek judicial review and the final determination of the court is that the $1,000 is includable in determining partnership taxable income.
10. The Partnership Representative.
Each partnership designates a partner (or other person) as the partnership representative. The partnership representative is very roughly analogous to the prior tax matters partner. Each partnership is required by the partnership audit rules to designate a partnership representative. The partnership representative has the sole authority to act on behalf of the partnership in an audit examination.88 While not required by the Code, the
88 I.R.C. § 6223 (“Sec. 6223. Partners bound by actions of partnership. (a) Designation of partnership representative. – Each partnership shall designate (in the manner prescribed by
© Terence Floyd Cuff and Jerald David August, 2016
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