TEFRA gave the tax partner the opportunity to extend the statute of limitations and present itself as the partnership`s representative before the IRS as part of a review procedure. But even with these responsibilities, the authority of the tax partner was not exclusive. Other partners could be involved in the audit process. While no organization wants to charge additional legal fees, changes to federal and regional law have made it inevitable. SKO`s lawyers are familiar with past and current law and are willing to update the Partnership Agreements/LLC to reflect these changes. In particular, Thomas E. Rutledge, co-author of the Kentucky LLC Act, co-author of a national LLC treaty, and co-author of a book on the Kentucky Limited Liability Company Act, can check your document, advise you on what it says, and help you with any necessary or recommended revisions. The partnership must make the choice each year of a timely return. The partnership must inform each partner of the choice. The partnership must also provide the IRS with the information it needs to identify partners. This information includes the name and tax identification number for each partner or shareholder of an S company that is a partner. If the partnership wishes to retain the capacity for choice, the partnership agreement should also limit all transfers to unauthorized owners, which would result in the partnership not fulfilling the opt-out conditions for taxation at partnership level. These types of restrictions are typically included in the « Transfer Restrictions » section of a corporate agreement.
Partners should review whether they revert existing corporate agreements to provide for the appointment of a partnership representative to deal with IRS issues. This is especially true when none of the partners are based in the United States. We also recommend that any amendment to the partnership or company agreement would contain all the privileged limitations on the partnership representative`s powers to take certain measures without the partnership agreement or by informing the partners. The new partnership audit rules will likely impact representatives of the partnership representative title, as the IRS now requires the partnership representative to have a significant presence in the United States. A significant presence implies, among other things, that it is available for a meeting with the IRS at an appropriate time and place, that it has a U.S. address and phone number where the partnership representative is reasonably reachable during business hours, and a U.S. taxpayer identification number. The partnership representative can be virtually any person, even an outsider of the company, as long as he respects the essential rules of presence. As a lawyer and CPA, I focus in my practice with Forrest Firm on the interface of the financial and legal impact of tax compliance. Contact me at the company if you have any questions about the IRS`s new partnership review rules. The company agreement should also address the question of whether elections are allowed to 6225 and 6226; the extent to which the partnership representative must keep the partners informed of the procedures implemented in accordance with the new laws; the extent to which the partnership representative must obtain the agreement of the members when making decisions on behalf of the CLL; and whether members are required to make additional capital contributions to cover a sub-taxable LLC payment. .
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