Bloomberg BNA:  “There is good news for partnerships and their counsel who spent the last five months studying proposed centralized partnership audit regulations that the IRS issued on January 18 and withdrew on January 20: the proposed regulations reissued on June 14 (REG-136118-15) are essentially the same as those published in January.  The proposed regulations implement the new centralized partnership audit regime enacted as part of the Bipartisan Budget Act of 2015 (BBA). The new regime and the proposed regulations generally apply to returns filed for partnership tax years beginning after December 31, 2017 . . . .

Preparing for the New Regime

Many partnerships (and limited liability companies taxed as partnerships) will find it necessary or desirable to amend the partnership (or operating) agreement in response to the new audit rules. For example, partnerships should carefully choose their representative and evaluate how the partnership agreement might be amended to provide guidance for the exercise of the representative’s broad statutory authority. Partnerships also should consider the ramifications of various partnership actions and elections, including the push out election, that affect both the partnership’s own financial condition and the tax attributes passed through to the partners. As well, the new rules provide that partners generally may not participate in or contest the results of an examination or other partnership proceeding without permission of the IRS. Therefore, the partnership should consider what safeguards might be appropriate to protect its own and its partners’ interests in the event of an audit.”