Time to Revise Your Partnership and LLC Agreements?

In June, the IRS reissued proposed regulations that adopt new centralized partnership audit procedures. These will replace the current TEFRA audit rules.

The short story is that by default, the PARTNERSHIP is responsible for paying any additions to tax, although the partnership can elect to push this out to the partners. The new rules also replace the “tax matters partner” with a “partnership representative” – this representative has greater authority to act without the involvement of the partners than in the past. There is also an opt-out election that smaller qualified partnerships can take.

Partnerships and LLCs should amend their partnership and operating agreements to provide for the changes in the law, although perhaps they may want to wait for final regulations to be issued. For more detail on the changes and items that should be addressed in the agreements, click HERE.