If you are part of an LLC or partnership, you should conduct a thorough review of the partnership agreement in light of new audit rules taking effect in the 2017 tax year.
Speaking at NJBIA’s Small Business Bootcamp: Avoiding Small Business Tax Mistakes, Professor Frank Brunetti of the business law firm Scarinci Hollenbeck, said the rules have replaced the tax matters partner with a partnership representative (or as Brunetti termed it, the “Czar of the Partnership”) to make all of the decision on a tax audit.
Professor Frank Brunetti
Additionally, if there is an assessment, it will be made at the partnership level instead of on the individual partners, and it will include all of the partners at the time of the assessment. So if an audit conducted in 2020 for tax year 2018 leads to a tax assessment in 2021, it will be assessed on everyone who is a partner in 2021. “If you weren’t a partner in the audit year 2018, it doesn’t matter,” Brunetti explained.
“It’s an entire game-changer, so that if you have partnerships, you really have to look at the ins and outs” of the new rule, Brunetti said.
Throughout the workshop, Brunetti and his colleague Gary Young stressed that small businesses should review any potential changes with their accountant to see how it impacts their individual businesses.
Need more? Check out these NJBIA member resources:
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Member Action Center, 1-800-499-4419/member411@njbia.org
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Webinar on Doing Business: LLP, Inc or LP?
