What the New Tax Regs Could Mean for LLCs and Partnerships

Jelsma: “Generally, all items shown or reflected on the partnership’s return and information on the partnership’s or LLC’s books are subject to determination and adjustment at the entity level.”

SAN DIEGO—The IRS’s proposed regulations on the implementation of its new centralized partnership audit regime impact every partnership and LLC nationwide, Phil Jelsma, a partner and chair of the tax practice team at CRE law firm Crosbie Gliner Schiffman Southard & Swanson LLP, tells GlobeSt.com. On June 14, the IRS re-released its proposed regulations on the regime, with the intention to decrease the administrative burden on the IRS by allowing it to assess and collect tax at the partnership level. In general, the proposed regulations provide rules for entities subject to the new centralized partnership audit regime and procedures for electing out, filing administrative adjustment request and determining the amounts owed by the entity or its owners attributable to IRS adjustments

We spoke with Jelsma—whose practice focuses on LLCs, partnership business and tax planning and who is also co-author of the book, The Limited Liability Company—about the implications of and potential impact of these regulations on LLCs and partnerships.