The IRS is ramping up enforcement efforts and focusing on partnerships. As a result, partnerships may soon receive IRS notices adjusting the partnership’s return. Due to the time it takes to select a tax return for audit and conduct the audit, these upcoming notices are likely to be for pre-2018 tax years when the partnership was subject to the complex TEFRA procedural rules. Under those procedures, the notice is a notice of Final Partnership Administrative Adjustment (FPAA), and the partnership is generally represented by the Tax Matters Partner (TMP). The FPAA is the equivalent of a notice of deficiency for partnerships, but only partnership items are adjusted and no deficiency is proposed.
Because the FPAA triggers the time period for filing suit to contest the partnership adjustments, this Client Alert highlights the top five things a TMP should do when receiving an FPAA.