Is your LLC or partnership ready? The new partnership IRS audit rules will change the game for many LLCs and partnerships. LLCs and partnerships will be forced to handle IRS audits differently in the future, and Allen Barron is prepared to help you to weather the coming storm.
The new partnership IRS audit rules will in many cases require some proactive steps including, but not limited to, a new election to name the “partnership representative” and changes to operating agreements and partnership agreements to reflect new changes in US law and the IRS tax code. Unlike past years where IRS audits in partnership and LLCs were usually focused upon the individual members or partners, the new rules will audit the LLC or partnership itself. The good news is the the new partnership or LLC representative does not have to be a member of the LLC or a partner in the partnership. Allen Barron’s experienced tax attorneys are prepared to assist with this crucial role.
The partnership representative will have important responsibilities as it relates to your LLC or partnership. The partnership representative will have the sole authority to deal with the IRS and act on behalf of or in binding acts regarding your LLC or partnership. The rules regarding the payment of taxes have changed as well. Instead of being taxed at the individual member or partner level the “default rule” is the partnership or LLC itself will be responsible for paying any resulting taxes or assessments at the highest tax rate. This changes the “flow-through” nature of an LLC or partnership to the point that your business will be the entity paying the taxes instead of the members or partners as individuals.
This will require changes in accounting and taxation strategy as well as potentially the structure of the LLC or partnership itself. The integrated legal, tax, accounting and business advisory services at Allen Barron help you to accomplish this with a single partner. We are able to provide a much greater perspective on the impact from every point of view – not just an accounting or business entity perspective. We invite you to contact Allen Barron for a free consultation at 866-631-3470 to discuss the new changes and the actions your business should take to protect itself and the associated tax liabilities you may face as a result of the new partnership IRS audit rules in the coming year.