Starting in 2018, the rules regarding the partner that would represent the Partnership before the IRS and how the IRS would assess any audit adjustments were changed. Under the old rules, a partnership, subject to the rules for consolidated audit proceedings in sections 6221 through 6234, would designate a partner as the Tax Matters Partner for the tax year for which the return is filed. The designated tax matter partner was required to be a general partner, and in most cases, also must be a U.S. citizen. For a limited liability company (LLC), only a member manager of the LLC was treated as a general partner. Under the pre-2018 rules, any audit adjustment were passed through to the partners and if necessary any collections would take place at the partner level.
For all tax years beginning on or after January 1, 2018, the designation of tax matters partner was changed to a “partnership representative” and the under the new rules, the IRS will first assess and collect any audit adjustment from the partnership, rather than the partners. The partnership can elect under certain circumstances to opt out of the new requirements. See Instructions for Form 1065
To designate a Partner Representative, from the Main Menu of the Tax Return (Form 1065) select:
- Schedule B – Other Information
- Additional Other Information
- select – Partnership Representative Information
Upon selecting Partnership Representative Information, a question will be posed asking ‘Is the Partnership Representative an Individual? If ‘YES’, the user will be directed to entry menu where the Name, Social Security Number, Phone Number and Address of the Individual Partner Representative can be entered.
If ‘NO’, the user will be directed to an entry menu where the Name, Employer Identification Number, Telephone Number and Address of the entity that is being designated as the Partnership Representative can be entered. However, when an entity is used as the Partnership Representative, an individual from that entity must still be designated and the user must submit the Name, Address, Social Security Number and Telephone Number.NOTE: This is a guide on entering the Partnership Representative into the Keystone Tax Solutions Pro program. This is not intended as tax advise.Â
Additional Resources
Instructions for Form 1065 – U.S. Return of Partnership Income