Some Recent IRS Administrative Changes

• DOI: http://doi.org/10.1002/jcaf.22217
• Published date: 01 November 2016
• Date: 01 November 2016
• Author: Caroline D. Strobel

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© 2016 Wiley Periodicals, Inc.

Published online in Wiley Online Library (wileyonlinelibrary.com).

DOI 10.1002/jcaf.22217

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Some Recent IRS Administrative Changes

Caroline D. Strobel

While we wait for the Novem-

ber election and new tax legis-

lation that will come early next

year regardless of the results,

the Internal Revenue Service

(IRS) has been making a num-

ber of significant administra-

tive changes that do not require

new legislation. They are also

writing new regulations for

existing legislation. This column

is covering a few of them.

NEW PARTNERSHIP AUDIT

PROCEDURES

Prior provisions governing

partnership audit procedures,

including those covering elect-

ing large partnerships, have

been repealed. In their place,

any change in items of income,

gain, deductions, or credit of

a partnership including a part-

ner’s distributive share is to be

determined at the partnership

level. Further, any amount

that is assessed and collected,

including the applicability of

any penalty, addition to tax, or

additional amounts related to

the adjustment of any item or

share is now determined at the

partnership level.

Adjustments that result in

tax underpayments can be col-

lected by the IRS directly from

the partnership in the year the

adjustment is made. The tax

on the underpayment can, with

certain exceptions, be imposed

at the highest individual or

corporate tax rate. Any under-

payment resulting from a part-

ner’s failure to treat an item

consistently with the partner-

ship return will be assessed as

a math error on the partner’s

return. A partner can avoid

these provisions if the partner

files a statement with the IRS

identifying the inconsistency.

Partnerships must desig-

nate a partnership representa-

tive who has sole authority to

act on behalf of the partner-

ship. If the partnership does

not have a designation in effect,

the IRS may select any person

to be the partnership repre-

sentative. The partnership and

all partners will be bound by

the actions of the partnership

and by any final decision in a

proceeding with respect to the

partnership.

The new legislation also

introduces new procedural

rules regarding notices of

proceedings and adjustment;

assessment, collection, and

payment; interest and penal-

ties; judicial review of part-

nership adjustments; and the

limitation period on making

adjustments.

MARKETPLACE NOTICES

TO EMPLOYERS

This year for the first time

employers will begin receiv-

ing notice from the Federally

Facilitated Marketplace (FFM)

indicating that one of their

employees signed up for health

coverage through the Market-

place and received advanced

premium subsidies for that

coverage. The Affordable Care

Act (ACA) generally requires

that applicable large employers

offer coverage that is affordable

and of minimum value to their

full-time employees and their

dependents or face a tax, often

referred to as the employer

“play-or-pay” provision of the

employer mandate. Tax liabil-

ity under the employer provi-

sion is triggered if one of the

employer’s full-time employees

receives a premium tax credit.

The amount of the tax is deter-

mined by the number of full-

time employees who received

the premium tax credit.

When an employee receives

a premium tax credit, the Mar-

ketplace is not required to send

the employer a Marketplace

notice. This is the first year

that notices are being sent and

FFM can only send a notice

if the employee provides the