May 24, 2017
Amend Partnership and LLC Agreements Now to Address New IRS Audit Rules

In late 2015, existing partnership audit provisions (applicable also to limited liability companies taxed as partnerships) were prospectively repealed and replaced with new audit procedures that significantly change how the Internal Revenue Service (“Service”) will approach partnership audits. The revised audit provisions become effective for years beginning on or after January 1, 2018. The impact of these new rules could be dramatic to existing partners and LLC members (“partners”) unless there are provisions in entity governing documents that provide protection.  
Without such protection, partners can be bound by agreements made with the IRS without the authority of the partnership or LLC (“partnership”) and in certain cases, existing partners can be forced to pay the taxes of former partners for the years they were still partners of the partnership.
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