Partnership Representative

The Internal Revenue Service (IRS) reports that the first audits conducted under the Bipartisan Budget Act Centralized Partnership Audit Regime (BBA) are wrapping up, with assessments recently issued or forthcoming.  Although the BBA only became mandatory for the 2018 tax year, taxpayers could elect into the BBA regime for the 2016 and 2017 tax years.  Over the past year, the IRS has stressed that partnership audits would be a priority for the agency going forward.  To that end, it has hired at least 50 partnership audit specialists to staff its new Large Partnership Compliance Program and revised its internal audit guidelines. 

Given the developments at the IRS—the backlog of audits clearing, increased specialized staff, and updated audit rules—taxpayers can expect 2022 to be an active year for partnership audits.  The BBA regime is a developing and unfamiliar set of rules that has not yet been scrutinized by the courts.  The first apparent BBA dispute appeared in a petition to the United States Tax Court filed on October 13, 2021.  Burris Cypress Lake Ranch LLC v. Commissioner (Docket No. 26396-21) concerns a partnership that apparently elected into early application of the BBA regime and is contesting notices of final partnership adjustment made with respect to tax years 2016 and 2017.  Taxpayers and practitioners should pay close attention to this case as the first opportunity to see resolution of various BBA issues.