SAN DIEGO—Last month, President Obama signed HR 1314, the Bipartisan Budget Act of 2015, a comprehensive bill which—among other things—significantly alters the way partnerships and limited liability companies are audited and taxed by the IRS. The new “streamlined” rules allow the IRS to audit and assess taxes and penalties against large partnerships more easily and retool a 33-year-old law that sets the rules for audits, Phil Jelsma, a partner and chair of the tax practice team at the San Diego-based commercial real estate law firm Crosbie Gliner Schiffman Southard & Swanson LLP, tells

According to the Congressional Budget Office, the new partnership auditing procedures are expected to increase Treasury revenues by up to $11.2 billion over the next decade. Jelsma, co-author of the book, The Limited Liability Company, says commercial real estate professionals should be aware of the changes in the legislation—especially since existing partnership and operating agreements will need to be revised to incorporate the new rules. He tells exclusively what the industry should know about these new rules and how they differ from the current law.

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