The Tufts Law Firm have created a special Partners in Peril program that is aimed at providing business owners in closely-held partnerships, LLPs, limited partnerships and LLLPs, LLCs and S corporations with advice regarding the unique issues that can come up with pass-through treatment.
Now, more than ever, partners and members need to be vigilant. Under the Bipartisan Budget Act of 2015 (BBA, P.L. 114-74), Congress has repealed the special rules for electing large partnerships, and implemented a new set of rules that will govern how the IRS will perform income tax audits of partnerships after 2017, though partnerships wanting to apply the new rules ae allowed to elect to have them apply for tax years beginning after November 2, 2015. These changes will have a profound impact on all of the LLCs operating here in Florida and elsewhere.
Business owners may receive a K-1 and not realize what obligations that they may to act without delay, were anything inside the four corners of the K-1 in error. Additional problems can arise when there are tiered partnership structures, or layers of partnership-like entities that can make it nearly impossible for an owner way down the chain (called an indirect partner) to identify partnership items sourced in an upper-tier partnership entity.
Now, with the major change in the way the IRS will audit partnership structures, the onus is on all members and partners to carefully review their partnership or operating agreements. The role of the "Partnership Representative" is now key; no longer will there be a tax matters partner or member under the new audit rules.
In the Partners in Peril program, the Tufts Law Firm is available to guide business owners through these issues early on, reviewing and consulting with you with regard to these agreements.
If a business owner fails to take prompt action, he or she may later find that it is too late to contest matters, or the items passing through from an up-the-chain partnership entity.
The rights and obligations owed to indirect partners is often times not addressed in the operating or partnership agreements, and this can create significant problems for owners who get an erroneous K-1, but don't know what to do. The filing of certain forms and providing notices to partnerships and LLCs may be a critical step for an "indirect" member or partner to take, and the failure to do so, may forever prejudice his or her or its ability to contest partnership items.
Currently, the firm's services in these programs are: