Page 99 - 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
in which the tax must be assessed against the partners does not expire before one year following the date on which the final partnership administrative adjustment may no longer be petitioned to the U.S. Tax Court or, if a petition was filed, a decision of the court with respect to such petition is final.179 [179 Sec. 6229(d) and (g).]
Adjudication of disputes concerning partnership items
After the IRS makes an administrative adjustment, the Tax Matters Partner (and, in limited circumstances, certain other partners) may file a petition for readjustment of partnership items in the Tax Court, the district court in which the partnership’s principal place of business is located, or the Court of Federal Claims.
5. Electing Large Partnership Audit Rules.
The tax law provides a special elective audit regime for large partnerships with more than 100 partners. This audit regime has not made much of a difference, since not many large partnerships have taken advantage of the special audit regime for large partnerships. A partnership with more than 100 partners can elect the electing large partnership rules. These rules provide for an audit at the partnership level. Adjustments are passed through to the partners who are partners in the taxable year in which the adjustment is made. The large partnership audit scheme provides for considerably diminished partner participation rights. The large partnership audit rules have not been especially popular. Few large partnerships have adopted the electing large partnership audit rules. Most practitioners have never dealt with these rules in practice.
The GENERAL EXPLANATION OF TAX LEGISLATION ENACTED IN 2015 (JCS-1-16, March 2016) provides this explanation of the large partnership audit rules:
Electing large partnership audit rules
Definition of electing large partnership
In 1997, an additional audit system was enacted for electing large partnerships.180 [180 Secs. 6240-6255, enacted by the Taxpayer Relief Act of 1997, Pub. L. No. 105-34.] The 1997 legislation also enacted specific simplified reporting rules for electing large partnerships.181 [181 Secs. 771-777.] The provisions define an electing large partnership as any partnership that elects to be subject to the specified reporting and audit rules, if the number of partners in the partnership’s preceding taxable year is 100 or more.182 [182 Sec. 775]
© Terence Floyd Cuff and Jerald David August, 2016
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