MTC, Business Groups Respond To Federal Partnership Audit Rules

State Tax Notes

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The federal rules will take effect for tax years beginning after December 31, 2017. The good news is that very few audits under these rules will commence before 2020. Thus, we have time to familiarize ourselves with the new regime, while the IRS and Treasury have stated, at least informally, that implementing regulations and other forms of guidance are not front-burner issues. Similarly, state legislatures, state revenue departments, and the Multistate Tax Commission also have time to analyze the federal rules and address the conformity issues in a reasoned and, ideally, uniform way—with input from the business and tax practitioner communities.

This article updates how the new partnership audit re- gime is being addressed at the state level and provides options. We hope our readers will gain insight into the beginnings of the new federal
regime, where it stands with the states, and where — in the author’s optimistic view (standard caveats apply here) — it’s likely headed.

Republished with permission. This article, “MTC, Business Groups Respond To Federal Partnership Audit Rules,” was first published in State Tax Notes on January 9, 2017, pp. 215-217.