The American Institute of CPAs has called on Congress to delay the start of the new centralized partnership audit regime. The AICPA’s recommendation came shortly after the IRS issued final regulations on electing out of the centralized partnership audit regime (T.D. 9829; TAXDAY, 2018/01/02, I.8).BackgroundThe Bipartisan Budget Act of 2015 (P.L. 114-74) repealed the TEFRA and electing large partnership rules. In their place, the BBA provides a streamlined structure for auditing partnerships and their partners at the partnership level. The Act established the effective date for this change as generally tax years beginning after December 31, 2017.Under the streamlined procedures, the IRS examines the partnership’s items of income, gain, loss, deduction, credit and partners’ distributive shares for a particular year of the partnership (the so-called “reviewed year”). Any adjustments would be taken into account by the partnership in the year that the audit or any judicial review is completed (the so-called “adjustment year”).“The new regime represents a significant departure from previous law,” the AICPA reminded lawmakers.Financial ReportingThe AICPA cautioned lawmakers that the impact of the centralized audit regime on financial reporting standards is unclear. Accounting professionals disagree whether payments made to the IRS as a result of examinations under the new rules would be obligations of a partnership or payments by a partnership on behalf of its partners. Further clarity is needed, the AICPA said.Technical CorrectionsA proposed package of technical corrections is pending in Congress, the AICPA added. The technical corrections would “significantly change” parts of the centralized audit regime rules, according to the AICPA. “The proposed changes also provide additional certainty to taxpayers regarding their obligations following an examination, while better assuring that the proper amount of tax is imposed.”DelayUnder current law, the centralized partnership audit regime took effect for tax years beginning after December 31, 2017. The AICPA told lawmakers that taxpayers need more time to implement the new rules. “Treasury and the IRS have not provided all of the necessary procedures and guidance for taxpayers to make informed decisions,” the AICPA said.By George L. Yaksick, Jr., Wolters Kluwer News StaffLogin to read more tax news on CCH® AnswerConnect or CCH® Intelliconnect®.Not a subscriber? Sign up for a free trial or contact us for a representative.