/  About Us / Details
August 20, 2018

Regulations Issued on Partnership Representative Under Centralized Partnership Audit Regime (article)

The IRS has issued final regulations regarding the designation and authority of the partnership representative under the centralized partnership audit regime. The final regulations make a number of changes to prior proposed regulations.

Eligibility to Serve as Representative

The final regulations clarify that:

  • A disregarded entity can serve as a partnership representative; and
  • A partnership may designate itself as its own partnership representative.

In either case, the entity must have substantial presence in the United States, and must appoint a designated individual that has a substantial presence in the United States to act on the entity’s behalf as partnership representative.

In addition, the final regulations remove the capacity-to-act requirement contained in the proposed regulations. This is because the partnership should have as much flexibility as possible in determining a partnership representative so long as the person meets the substantial presence in the United States requirements.

Time for Changing the Representative

The final regulations allow the partnership to change the partnership representative through revocation when the partnership is notified that the partnership return is selected for examination as part of an administrative proceeding, in addition to when the notice of administrative proceeding (NAP) is mailed. Under the proposed regulations, the partnership was not able to change the partnership representative until it received the NAP.

Resigning Representative

The final regulations remove the ability of a resigning partnership representative or designated individual to designate a successor. Because it is unfair to the partnership to allow a resigning partnership representative to request adjustments to items of a partnership, the final regulations also have been revised to prohibit a resignation at the time of the filing of an administrative adjustment request.

Other Changes

Among the additional changes contained in the final regulations are changes to:

  • The ability to revoke partnership representative status;
  • The effective date of a revocation or resignation of a partnership representative;
  • Notification requirements for resigning partnership representation or revocation of partnership representation designation; and
  • IRS designation of a partnership representative.

Temporary Regulations Removed

The final regulations remove temporary regulations regarding the election to apply the centralized partnership audit regime to partnership tax years beginning after November 2, 2015, and before January 1, 2018.

Effective Date

The final regulations are effective on August 9, 2018, the date when published in the Federal Register.

Copyright © 2018, CCH INCORPORATED. All Rights Reserved. Contents of this publication may not be reproduced without the express written consent of CCH and CBIZ. To ensure compliance with requirements imposed by the IRS, we inform you that—unless specifically indicated otherwise—any tax advice in this communication (and any attachments) is not written with the intent that it be used, and in fact it cannot be used, to avoid penalties under the Internal Revenue Code, or to promote, market, or recommend to another person any tax related matter. This publication is distributed with the understanding that CBIZ is not rendering legal, accounting or other professional advice. The reader is advised to contact a tax professional prior to taking any action based upon this information. CBIZ assumes no liability whatsoever in connection with the use of this information and assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

CBIZ MHM is the brand name for CBIZ MHM, LLC and other Financial Services subsidiaries of CBIZ, Inc. (NYSE: CBZ) that provide tax, financial advisory and consulting services to individuals, tax-exempt organizations and a wide range of publicly-traded and privately-held companies.

Insights in Your Inbox
Find Us
  • OR