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Pawche  
#1 Posted : Wednesday, September 19, 2018 9:01:10 PM(UTC)
Pawche

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The new partnership rules for audits of federal partnership returns require that a partnership have a Partnership Representative. If one is not designated, the IRS may appoint one. The IRS will only deal with this Representative in matters related to an audit. These rules apply for audits of tax returns for the 2018 tax year and beyond.
Below is some language developed by ICLUBcentral to add to partnership agreements covering the appointment, duties and limits of a Partnership Representative. Note that a section 6221 opt-out of the centralized audit procedures requires that a club has no trusts as partners. For clubs wishing to continue to allow trusts, alternative language is being developed for that situation.

Partnership Agreement Amendments


US Code Sections 6221- 6223 designation and election: The Club Treasurer shall be the designated Partnership Representative (PR) for purposes of Section 6223 and shall be responsible for dealing with the IRS in the event of an audit. Unless otherwise directed by the partners, the PR shall annually, in connection with filing the Club’s Form 1065 tax return, indicate the Club elects to be treated under subsection 6221(b)(1)(a), that is, an election out of the audit rules of Section 6221. The Treasurer shall include with such election any required information to make such election effective. In the event of an IRS audit, the PR will represent the club but is not authorized to make any settlement agreement without the majority consent of the partners. Partners of the Club shall consist only of individuals; no trust may be a partner.

Russell Malley

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