New Partnership Representative Final Regulations Under Section 6223 Centralized Audit Regime

As part of a flurry of regulatory guidance, the IRS on Aug. 6, 2018, finalized regulations governing the designation of partnership representatives for purposes of the centralized partnership audit regime. The final regulations make some significant changes to previously proposed regs, so tax advisers should have a solid understanding of the scope of a partnership representative’s role to avoid adverse tax consequences.

Section 6223 requires partnerships to designate a “partnership representative who shall have the sole authority to act on behalf of the partnership” on matters related to IRS examinations of the partnership. The requirement created confusion among practitioners, as indicated in the comment period for the proposed regulations.

The final guidance takes many of the comments into account, including allowing a disregarded entity (DRE) to serve as a representative of the partnership, but only with the selection of a “designated individual” to act on behalf of the representative DRE. Critically, the Service also removed the capacity to act requirement for designated representatives.

The final regulations also offer extensive guidance on the process of removing or replacing a partnership representative. Taken as a whole, the regs provide a roadmap for tax professionals to advise partnership clients on ensuring that the partnership representative can appropriately respond to the partnership’s potential tax issues.

Listen as our experienced panel provides a thorough and practical guide to the strategies and mechanics of electing out of the centralized partnership audit rules.

1. Structure of centralized audit regime for partnerships
2. Role of the partnership representative under Section 6223
3. Final Section 6223 regulations and changes from prior proposed regs
4. Designating a DRE as partnership representative
5. IRS procedures for when a partnership fails to designate an eligible party as partnership representative
6. Terminating/replacing partnership representative

The panel will discuss these and other relevant topics:

• What changes do the final regulations make to the “capacity to act” provision in the proposed regs?
• How to change a partnership representative after the IRS has contacted a partnership about a possible audit
• Rules governing the use of DREs as partnership entities
• Changes to the provision allowing the IRS to designate a representative if the partnership has not made an eligible selection

Learning Objectives

After completing this course, you will be able to:

• Identify persons and parties eligible to serve as partnership representatives for purposes of the centralized audit regime
• Discern the powers and limitations of the partnership representative to act on behalf of the partnership
• Recognize the process for terminating and replacing partnership representatives
• Determine how to name a DRE as a partnership representative

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience at mid-level within the organization with supervisory authority over other preparers/accountants in preparing complex tax forms and schedules and preparing for partnership audits. Specific knowledge and understanding of partnership structures and operating agreements and IRS partnership audits. Familiarity with new partnership audit rules under the Bipartisan Budget Act of 2015

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IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).