Lee Meyercord Quoted in Tax Notes Today on IRS Partnership Audits Rules

“IRS Urged to Avoid Harming Partnerships With New Audit Regime”

Practitioners urged the government September 18 to avoid economically disrupting partnerships that would be subject to proposed regulations (REG-136118-15) implementing a new partnership audit regime.

Lee Meyercord of Thompson & Knight LLP, also speaking on behalf of the State Bar of Texas tax section, said a glitch in the BBA potentially allows the IRS to make partnership adjustments at any time. Section 6235(a)(2) and (3) provide limitation periods that are based on the date the notice of proposed partnership adjustment (NOPPA) is issued, she said.

“The implication is that the IRS could issue a NOPPA at any time” and then use the limitations periods under section 6235(a) and (b) to make partnership adjustments, Meyercord said, adding, “We don’t think this is the Congress’s intent.” The BBA does not include legislative history endorsing an unlimited limitations period for partnership adjustments, she said.

Meyercord said the logical inference is that the NOPPA must be issued within the three-year period established by section 6235(a)(1), and the final regs should provide that the NOPPA be issued within that period.