Washington, D.C. (July 5, 2024) The American Institute of CPAs (AICPA) has requested additional guidance from the Internal Revenue Service (IRS) and Department of the Treasury related to the centralized partnership audit regime. In a letter, the AICPA submitted recommendations to simplify the administration of the forms, instructions and schedules used to push out adjustments under Internal Revenue Code (IRC) section 6226 and the filing of an Administrative Adjustment Request (AAR) under section 6227.
The Bipartisan Budget Act of 2015 (BBA) introduced a new centralized partnership audit regime (CPAR) for IRS audits of partnerships. While the CPAR was intended to provide a mechanism for the IRS to audit partnerships more efficiently, the IRS, taxpayers, and practitioners who have been working under the CPAR regime since its inception have encountered numerous issues resulting in an extreme administrative burden.
In the most recent update to its Strategic Operating Plan FY 2023-2031, created to outline the allocation of funds granted through the Inflation Reduction Act, the IRS announced plans to increase audit rates by nearly ten-fold on large, complex partnerships with assets over $10 million.
“The recommendations in the letter, if implemented by the IRS, will help make the lives of tax practitioners easier by fixing outstanding issues related to the centralized partnership audit regime,” says Kristin Esposito, AICPA’s Director of Tax Policy & Advocacy. “Unless action is taken to address the outstanding concerns, we expect these issues to continue to compound as the number of partnership returns filed and audited continues to grow.”
About the American Institute of CPAs
The American Institute of CPAs® (AICPA®) is the world’s largest member association representing the CPA profession, with 400,000 members in the United States and worldwide, and a history of serving the public interest since 1887. AICPA members represent many areas of practice, including business and industry, public practice, government, education and consulting. AICPA sets ethical standards for its members and U.S. auditing standards for private companies, not-for-profit organizations, and federal, state and local governments. It develops and grades the Uniform CPA Examination, offers specialized credentials, builds the pipeline of future talent and drives continuing education to advance the vitality, relevance and quality of the profession.