Partnership Audits

Updated January 2019

The issue

In 2015, Congress passed changes to the partnership audit rules included in the Internal Revenue Code. The new changes were effective Jan. 1, 2018, with IRS audits under the new regulations beginning in 2020 or 2021. The new changes allow the IRS to audit, assess and collect partnership taxes at the entity level.

States will need to conform with the federal changes to be able to collect state liabilities resulting from an IRS partnership audit.

Why you should care

CPAs work with or for many businesses that are organized as partnerships. Uniform reporting standards reduce complexity and compliance costs while providing certainty for partnerships whose partners may be in multiple taxing jurisdictions.

What you can do

Contact your legislators and ask them to support model legislation that would provide uniform application of the partnership audit rules and reduce complexities for taxpayers and tax administrators.