McDonald Hopkins, a national law firm with offices in Chicago, Cleveland, Columbus, Detroit, Miami and West Palm Beach, announced that it is offering its clients two new services. The services are:
- Partnership and LLC Amendment Program
- Partnership Representative Specialists
This law firm is offering to be the partnership representative for clients for a fee. Since becoming aware of the new partnership tax audit rules and the requirement that entities taxed as partnerships appoint a partnership representative in 2016, I believed that accounting firms and law firms with partnership tax lawyers would offer their services as a partnership representative. It makes sense.
Few members of an LLC have any knowledge of partnership tax law. Which would you rather have be your LLC’s partnership representative who will be the only party that interacts with the IRS and fights a proposed tax assessment – a CPA or tax lawyer with experience representing clients before the IRS with respect to partnership tax law or a member of your LLC who knows nothing about partnership tax law or audits? Seems like a no brainer.
McDonald Hopkins says “Every partnership and LLC should amend their governing documents to:
- Designate a partnership representative who will have the sole authority to make binding decisions in audit proceedings. The IRS will designate a partnership representative if one is not appointed.
- Authorize selections regarding complex set of elections under the new audit rules.”
I agree. I don’t offer partnership representative services, but I do provide a state of the art “Tax Audit Agreement” for LLCs taxed as partnerships in which the members address the issues raised by the new partnership tax audit rules effective January 1, 2018. If your LLC is taxed as a partnership it will be a big mistake in my opinion as a tax lawyer for the members to fail to enter into an agreement with the LLC’s partnership representative that sets the ground rules for the partnership representative’s duties representing the LLC in a partnership tax audit.
How to Purchase a Tax Audit Agreement for Your LLC
I’ve made it very easy for LLCs taxed as partnerships to hire me to prepare a state of the art Tax Audit Agreement. All you need to do is complete and submit my “Tax Audit Agreement Questionnaire.” The fee is $497 unless you want to purchase the optional DocuSign digital signature for all the members for an additional $100. Divide the $497 by the number of members in your LLC and you will see that the per member cost is worth the risk to the LLC in being audited by the IRS and not being prepared for the audit.