Page 212 - 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
The partnership representative has no obligation under the audit rules to inform the partners of these notices or of a partnership audit.
c. Interest on Underpayments.
Interest accrues on imputed underpayments at the rate applicable to underpayments.123 Interest is assessed at the partnership level. Interest on the imputed underpayment is assessed for a period (i) beginning on the day after the tax return due date for the reviewed year [the year under audit] and (ii) ending on the day immediately following the partnership tax return due date for the adjustment year [the year in which the audit concludes]. Interest, however, will end earlier on the date of payment of the imputed underpayment.
d. Penalties.
Penalties are assessed at the partnership level.124 These penalties potentially apply:
123 GENERAL EXPLANATION OF TAX LEGISLATION ENACTED IN 2015 (JCS-1-16, March 2016) advises:
Interest
In general, interest due is determined at the partnership level and accrues at the rate applicable to underpayments.242 [242 Sec. 6621(a)(2).] Two periods are relevant in computing the total interest due: the period in which the imputed underpayment of income tax exists, and the period attributable only to late payment of any imputed underpayment after notice and demand. For an imputed underpayment, interest accrues for the period from the due date of the return for the reviewed year [the year under audit] until the due date of the adjustment year [the year in which the audit concludes] return, or, if earlier, payment of the imputed tax. If the imputed underpayment is not timely paid with the return for the adjustment year [the year in which the audit concludes], interest is computed from the return due date for the adjustment year [the year in which the audit concludes] until payment.
If the partnership elects the alternative payment method under section 6226, under which the underpayment is determined at the partner level, the interest due is computed at the partner level. The underpayment interest begins to accrue from the due date of the return for the taxable year to which the increase is attributable, at a rate two percentage points higher than the rate otherwise applicable to underpayments. 124 GENERAL EXPLANATION OF TAX LEGISLATION ENACTED IN 2015 (JCS-1-16, March 2016)
advises:
Penalties
Generally, the partnership is liable for any penalty, addition to tax, or additional amount.243 [243 Sec. 6233(a)(1)(B).] These amounts are determined at the partnership level as if the partnership were an individual who was subject to Federal income tax for the reviewed year [the year under audit], and the imputed underpayment were an actual underpayment or understatement for the reviewed year [the year under audit].
A penalty, addition to tax, or additional amount may apply with respect to an adjustment year [the year in which the audit concludes] return of a partnership in the event of late payment of an imputed underpayment, or, in the case of an election by the partnership under section 6226, with respect to the adjustment year [the year in which
© Terence Floyd Cuff and Jerald David August, 2016
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