Final Regulations for CPAR Audit Regime Released by the IRS

The IRS has issued the final version of regulations for the new centralized partnership audit regime (CPAR) that will apply to tax returns for partnership tax years beginning after December 31, 2017. This set of final regulations completes the regulations on CPAR. Separate sets of final regulations that deal with the election out of the CPAR regime and the partnership representative had previously been released.

The proposed regulations can be downloaded from the IRS website via the following link:

TD 9844 - Final CPAR Regulations

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Additional CPAR Proposed Regulations Issued to Deal with International Tax Issues

The IRS has released additional proposed regulations (REG-119337-17) on the Centralized Partnership Audit Regime (CPAR) that was created by the Bipartisan Budget Act of 2015.  These regulations, which add to the proposed regulations issued in June, address the impact of various international tax provisions on CPAR exams.

Specifically, these regulations look at the relationship of CPAR to the existing withholding obligations for certain foreign partners.  The proposed regulations make it clear that, generally, such withholding obligations are not covered by CPAR, but remind the reader that the IRS has taken the position in the June proposed regulations that he agency retains the right to separately examine the partnership and/or partners for any tax not covered by CPAR.

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On Second Attempt, IRS Publishes Proposed Regulations for BBA Partnership Audit Regime Taking Effect Next Year

The IRS, after pulling back a version in January in light of President Trump’s executive order limiting the issuance of new regulations, has finally released the important proposed guidance on the implementation of the revised partnership audit regime enacted as part of the Bipartisan Budget Act of 2015.  This version was published in the Federal Register on June 14, 2017. [REG-136118-15]. 

This second pass is little changed from the version the IRS was set to release in January of 2017.  Aside from fixing minor typographical errors in the original, this version removes a single example that dealt with the imputed underpayment and added some additional discussion in the preamble of the issues the IRS continues to consider regarding tiered partnerships and these regulations.

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IRS Releases, Then Pulls Back, Proposed Regulations Implementing BBA Partnership Audit Regime

The IRS had released proposed regulations (REG-136118-15) that explain how the IRS proposes to implement the centralized partnership audit regime adopted as part of the Bipartisan Budget Act of 2015.  The provisions contained in that bill created a new audit arrangement for partnerships which, by default, will have a tax imposed at the end of an audit on the partnership to take into account any adjustments that would have increased partners’ taxes had the items been reported on the original return as is being proposed in the audit.

The new centralized regime takes effect for tax years beginning on or after January 1, 2017, though partnerships under exam for years beginning after November 2, 2015 and before January 1, 2018 may elect to have these provision apply.

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IRS Releases Temporary and Proposed Regulations for Electing Early Application of BBA Partnership Exam Rules

The IRS has released temporary regulations (TD 9780) implementing the revised partnership examination procedures adopted as part of the Bipartisan Budget Reconciliation Act of 2016 (BBA).  While the rules are not mandatory until years beginning on or after January 1, 2018, partnerships may elect to come under the rules for tax years beginning after November 2, 2015 and before January 1, 2018. [Section 1101(g)(4) of the BBA]

The proposed regulations are meant to provide information on making the election to come under the rules early.

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Blue Book Indicates Congress Has Left It Up to the IRS Whether Disregarded Entity Partners Will Block Any Election Out of New Partnership Audit Regime

The Joint Committee on Taxation published its Blue Book (General Explanation of Legislation Enacted in 2015) for tax laws passed in 2015, and it gives some insight into the limited extent of statutorily mandated “acceptable” partners that Congress decided should enable a partnership to elect out of the new partnership audit regime when it comes into full effect for tax years beginning on or after January 1, 2018.

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