Page 176 - 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
include an individual, a trust, estate, partnership, association, company or corporation.” This presumably does not include disregarded entities.
ii. Substantial Presence in the United States.
Query: What is a “substantial presence in the United States?” The law to date has not clarified the answer to this question. The regulations presumably will provide an answer.
The Code clarifies that the partnership representative must have “substantial presence in the United States.” Neither the Code nor the General Explanation of Tax Legislation Enacted in 2015 (JCS-1-16, March 2016) provide further clarifications. It is not clear whether “substantial presence” requires physical presence or a tax presence.
The General Explanation of Tax Legislation Enacted in 2015 (JCS-1-16, March 2016) states: “A substantial presence in the United States enables the partnership representative to meet with the Secretary in the United States as is necessary or appropriate, and facilitates communication during the audit process and during any other proceedings in which the partnership is involved.” This suggests that substantial presence should be a physical presence test.
It is not clear that a United States citizen or resident alien necessarily has a substantial presence in the United States for purpose of qualifying as a partnership representative.
Query: Does a United States citizen who is nonresident have a “substantial presence in the United States? Does a “substantial presence” require a green card for a foreigner? Must a foreign individual need to be a resident alien to have a “substantial presence in the United States”? Are tax treaties relevant to whether someone has a “substantial presence” in the United States? Is a permanent home in the United States relevant to “substantial presence”? Is habitual abode relevant to “substantial presence”? Is domicile relevant to “substantial presence”? Are factors such as voter registration, place of filing tax returns, property ownership, driver’s license, car registration, marital status, vacation, employment, bank accounts, etc. relevant to determining “substantial presence”? What does a partnership do in selecting a partnership representative if none of the partners has a “substantial presence in the United States”? How does a foreign corporation or partnership demonstrate a “substantial presence” in the United States? Is a permanent
© Terence Floyd Cuff and Jerald David August, 2016
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