New Partnership Audit Procedures For 2019

Howdy partner!

If you run your business as a partnership, or an LLC taxed as a partnership, there are some important things you need to know.

For starters, you should be aware that Congress changed the IRS procedures for auditing partnerships. These new procedures take effect beginning with your 2018 partnership tax return.

Under the new rules, an audit can lead to a partnership-level tax at a 37-percent rate. Ouch!

But there’s hope, and I’ll explain the new rules. Plus, I’ll tell you how your partnership can potentially avoid paying this new, steep audit tax.

All will be revealed when you read my new article titled 2019 Brings You New Partnership Audit Procedures.

Four ways our fact-filled article can help you:

1. We’ll explain one of the most important new rules. The new procedures apply to partnership tax-years beginning after December 31, 2017. Under the new procedures, your partnership will pay an “imputed adjustment” in the tax-year the audit concludes. All the rather complex changes in the law will be explained when you read the full article.
2. We’ll also tell you why you can wave goodbye to your tax-matters partner. Here’s why. The tax-matters partner no longer exists. A partnership now must designate a partnership representative if it’s subject to the new audit procedures. There are three major differences concerning the new partnership representative’s role. We’ll go over them in detail when you read the full article.
3. We’ll warn you about two big problems you’ll face. There are two ways these new audit procedures can create a bad outcome for you and your partnership:
   1. The 37-percent tax-rate is likely higher than the rate you’d pay on your individual Form 1040.
   2. If the current partners changed from the audited year, then a partner who wasn’t involved at that time might pay tax on the partnership’s prior actions. All will be explained when you read the full article.
4. We’ll tell you the good news. Yes. There is some. You see, if you know what you’re doing (and we do!), you can avoid all the pain. For starters, certain small partnerships can elect out of the new partnership-audit procedures. You also have the option of electing to push the tax adjustments to the partners who own the partnership in the year under audit. You’ll get the whole story when you read the full article.