Page 233 - 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
penalties resulting from a partnership adjustment. Interest is calculated as of the due date of the return for the adjusted year and ending on the earlier of the return due date for the partnership taxable year in which the adjustment takes effect or the date the partnership pays the imputed underpayment.
Penalties are determined by applying Section 6651(a)(2) to the failure to pay. The accuracy related penalties, as well as the fraud penalty, are determined on a year-by-year basis without offsets, based on the amount of the imputed underpayment. The partnership may assert any defense against the addition to tax such as reasonable cause, reliance on tax advisor, substantial authority, etc. as if the partnership were a taxable individual partner. Similarly, accuracy and fraud penalties will continue to be assessed against the partnership in the same manner as if it were an individual. Presumably, a partnership, since it is subject to assessment and collection, will be subject to some if not all of the criminal provisions under Title 26, including Section 7203, which makes it a felony to evade the collection of any tax due.
20. Judicial Review.
The partnership may file a petition for review of a final partnership adjustment within 90 days after the date on which a notice of final partnership adjustment is mailed under Section 6231.141
and the imputed underpayment were an actual underpayment (or understatement) for such year.
(b) INTEREST AND PENALTIES WITH RESPECT TO ADJUSTMENT YEAR [THE YEAR IN WHICH THE AUDIT CONCLUDES] RETURN. –
(1) IN GENERAL. – In the case of any failure to pay an imputed underpayment on the date prescribed therefor, the partnership shall be liable –
(A) for interest as determined under paragraph (2), and
(B) for any penalty, addition to tax, or additional amount as
determined under paragraph (3).
....
(3) PENALTIES. – Penalties, additions to tax, or additional amounts determined under this paragraph are the penalties, additions to tax, or additional amounts that would be determined –
(A) by applying section 6651(a)(2) to such failure to pay, and
(B) by treating the imputed underpayment as an
underpayment of tax for purposes of part II of subchapter A of chapter 68.
141 I.R.C. § 6234 provides:
SEC. 6234. JUDICIAL REVIEW OF PARTNERSHIP ADJUSTMENT.
(a) IN GENERAL. – Within 90 days after the date on which a notice of a final
partnership adjustment is mailed under section 6231 with respect to any partnership taxable year, the partnership may file a petition for a readjustment for such taxable year with –
(1) the Tax Court,
© Terence Floyd Cuff and Jerald David August, 2016
164