Tagpartnership tax

Tax Regulations Subject to New 2-1 Rule

Budget, tax form, gavel and dollarsBy:  Amanda Wilson

Yesterday, President Trump signed an executive order that requires government agencies to identify two regulations for repeal for every new regulation that they wish to issue.  This order applies to tax regulations (including proposed regulations), and will force the IRS and Treasury to prioritize  what guidance to issue in the near future.  While the IRS pulled its proposed regulations on the new partnership audit rules last week, guidance in this area is needed and must be forthcoming.  The question is what will be repealed to make way for it?

IRS Pulls Proposed Partnership Audit Regulations

By:  Amanda Wilson

As I previously discussed (here), the IRS released last week long awaited regulatory guidance addressing the new partnership audit rules.  The status of these proposed regulations is unclear, though, as the IRS officially withdrew the regulations  yesterday in response to a White House memorandum ordering a freeze on all regulatory guidance that had not yet been published in the Federal Register.  (The IRS had released the regulations but they had not yet been published in the Federal Register).

While the status of the proposed regulations is unclear, what is clear is that taxpayers need guidance on how the new audit rules will be implemented.    Hopefully we will get answers soon, because these new rules go into effect next year.

Electing into New Partnership Audit Rules

By:  Amanda Wilson

As previously discussed (here), TEFRA, the audit regime that has long applied to partnerships, has been repealed and a new partnership audit regime is poised to go into effect for tax years beginning in 2018.  The new audit rules allow for an earlier effective date if the partnership so elects (although few partnerships would likely want to do so).

A Treasury official  stated during last week’s ABA Tax Section meeting that guidance on how to elect into these new audit rules is expected very soon.  A more comprehensive notice of proposed rulemaking is then expected to follow.


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