New federal rules taking effect in 2018 that will affect partnerships and limited liability companies have prompted law firms to alert clients that they should review and amend their governing documents and designate a partnership representative in case of an audit by the IRS.
At least one firm, McDonald Hopkins, has created an entire program to address the changes that partnerships and limited liability companies may need to make. These businesses must elect a “partnership representative” who will have sole decision-making power for the company and all shareholders in discussions with the IRS. Those decisions include whether the partnership or a particular partner will pay any underpayment in taxes the audit finds. Partnerships that don’t designate a partnership representative will have one designated by the IRS.
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