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HWH Tax Alerts

August 15, 2016

Treasury Department Issues Regulations For Early Elections Into New Partnership Audit Regime

On August 4th, the Treasury Department and IRS released temporary and proposed regulations addressing the manner in which partnerships may make an early election to apply the new partnership audit rules created by the Bypartisan Budget Act of 2015 ("BBA") to partnership tax years beginning after November 2, 2015 (the date the BBA was enacted) and before January 1, 2018. For partnerships not making the early election, the new audit regime will generally apply only to tax returns for partnership tax years beginning after December 31, 2017.

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New Partnership Audit Rules: The Implications for Partnerships and Their Advisors

The Bipartisan Budget Act of 2015 was signed into law on November 2, 2015, and among other provisions, includes new partnership audit rules intended to make it easier for the IRS to collect tax liabilities resulting from partnership audits. The new partnership audit rules fundamentally change the manner in which the IRS conducts audits of partnerships and collects resulting tax liabilities. For more information, read HERE.

Supreme Court's Decision in Clarke: Implications in Light of New IDR Directives

On June 19, the U.S. Supreme Court, in U.S. v. Clarke, addressed when a taxpayer is entitled to an evidentiary hearing at which IRS officials can be examined on their reasons for issuing a summons. The Court held that while a naked allegation of improper purpose is not sufficient to challenge the issuance of a summons, when “the taxpayer can point to specific facts or circumstances plausibly raising an inference of bad faith,” the taxpayer is entitled to an evidentiary hearing on the question of whether the summons was issued for an improper motive.  While the taxpayer is not required to possess direct evidence of bad faith, the taxpayer “must offer some credible evidence supporting his charge.”  

Read more HERE.

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