Megan L. Brackney was quoted in a recent Tax Notes article entitled “A Look Ahead: Mo’ BBA Audits, Mo’ Problems,” published on December 30, 2021. Brackney analyzes potential issues with the implementation of Bipartisan Budget Act “BBA” procedures to IRS partnership audits.
The article notes:
According to Megan L. Brackney of Kostelanetz & Fink LLP, a lurking question is what happens if a partnership has elected out of the BBA and the IRS rejects the election. “Perhaps the IRS believes one of the partners is not qualified to elect out or that there really is a constructive partnership with another entity,” she said.
It’s unclear if the partnership can immediately challenge the rejection by requesting a conference with the IRS Office of Appeals or petitioning for Tax Court review, or if the partnership has to go through the audit first and then challenge the IRS’s determination that it is ineligible to elect out of the BBA, Brackney said.
“If the Tax Court finds that the election was proper and the BBA does not apply, what happens next?” Brackney wondered. “Does the IRS have to start over? What about the statute of limitations? Will extensions be valid if signed by a partnership representative, even though the partnership representative concept wouldn’t apply if the BBA doesn’t apply?”
Brackney said another uncertainty is how an audit should proceed if an issue spans several tax years and some of those years fall under the BBA while others don’t, either because those years are pre-BBA and still under the 1982 Tax Equity and Fiscal Responsibility Act or because the partnership has elected out of the BBA for one year but not another.
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