By Ron Holmes
Your Partnership or LLC may need amending
Many limited partnership agreements and limited liability company agreements may need to be amended to come into compliance with significant changes made to partnership IRS audit procedures that were included in the Tax Cuts and Jobs Act. The new changes apply to partnership 2018 tax returns (which would include LLC returns that claim partnership status for tax purposes). Many limited partnership agreements and company agreements may need to be revised due to the following significant changes:
- The IRS may collect tax from the partnership (or LLC) and not the partners (members).
- Current partners (members) could be responsible for tax liabilities of prior partners (members).
- Partnerships (or LLCs) must select a representative to deal with the IRS, who is no longer known as a “tax matters partners” but as a “partnership representative”. These representatives have more power than previously granted, including the sole authority to act on behalf of the audited partnership (or LLC).
- There are new opt out provisions that apply to partnerships or LLCs with 100 or fewer partners, but only if the partnership or LLC does not issue a K-1 to a partner or member which is a partnership, disregarded entity, trust or certain other partners.
The new changes apply regardless of when partnership or LLC agreements were written
These changes apply to partnership agreements and company agreements whenever they were written, not just new partnership agreements or company agreements. Accordingly, you should have your partnership agreements and company agreements reviewed to assure compliance with the new IRS audit procedures. We can help you with that. Contact Ron Holmes at 469.916.7700 x105 if you need assistance.