Megan L. Brackney was quoted in a recent Tax Notes article entitled “Most Partnerships Are Staying in the Centralized Audit Regime,” published on July 14, 2021. Brackney analyzes the determination by partnerships to stay in or elect out of the centralized partnership audit regime enacted by the Bipartisan Budget Act of 2015 (BBA).
The article notes:
Paz’s comments came in response to a question from Megan Brackney of Kostelanetz & Fink LLP, who noted that there were a lot of questions regarding scope when the BBA was enacted and when proposed regulations (REG-136118-15) were first promulgated in 2017.
“There was a lot of controversy about whether or not the IRS should interpret the statute broadly to allow more partnerships to elect out,” Brackney said.
“The Treasury said that they really felt like Congress’s intent was that the BBA should apply to as many partnerships as possible,” Brackney explained.
One often-cited benefit of the BBA is its centralized nature — that is, partnerships and the IRS will not have numerous separate audits to contend with. “It’s more efficient on both sides to have it done on a centralized level,” Brackney explained.
However, for partnerships that elect out, Brackney sees potential audit and administrative challenges ahead for the IRS. For example, she says there could be inconsistent outcomes or key procedural differences in the way tax cases get resolved for partners who take different approaches to assessments or other issues.
Brackney said the determination to stay in or elect out of the BBA is unique to each partnership. But she pointed out that some partnerships may think that the IRS is less likely to audit them if they remain outside the centralized regime.
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