Page 184 - 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
Should an accountant or an attorney serve as the partnership representative? The jury is out. Accountants and attorneys frequently represent partnerships in audits. The powers of the partnership representative, however, go far beyond the normal powers of an accountant or attorney. Accountants and attorneys also may be unsure whether their errors and omissions insurance will cover them in a capacity as partnership representative.
Query: Who may act for the partnership representative if the partnership representative itself is an entity? We can presume that the entity will act through its officers, its managers, or its partners. Documents should be signed by someone who has legal capacity to bind the partnership representative.
Query: Can the partnership representative be a disregarded entity?
g. Failure to Designate Partnership Representative.
Section 6223(a) provides: “Each partnership shall designate (in the manner prescribed by the Secretary) a partner (or other person) with a substantial presence in the United States as the partnership representative who shall have the sole authority to act on behalf of the partnership under this subchapter. In any case in which such a designation is not in effect, the Secretary may select any person as the partnership representative.”
The second sentence inspires a series of questions:
 Who will the Internal Revenue Service select as partnership representative?
 Must the Internal Revenue Service exercise good faith in designating a partnership representative?
 Can the Internal Revenue Service select an existing partner to serve as partnership representative?
 Can the Internal Revenue Service force an existing partner to serve as the partnership representative?
 What happens if the partner refuses to serve as partnership representative?
 How does the Internal Revenue Service select a partnership representative?
 Can the Internal Revenue Service appoint an Internal Revenue Service agent to serve as the partnership representative?
© Terence Floyd Cuff and Jerald David August, 2016
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