Published

MFA Submits Comments on Proposed Tiered Partnership Reporting Rules

On Monday, March 19, MFA submitted a comment letter to Treasury and the IRS on the proposed tiered partnership reporting rules.  In the letter, MFA expressed support for the proposed rules that would permit all partnerships in tiered partnership structures to make an election under Section 6226 of the Internal Revenue Code to push out audit adjustments to partners and have the partners pay any tax underpayment resulting from the audit.  MFA also encouraged Treasury and the IRS to clarify or modify certain aspects of the proposed rules to help improve the administrability of the for partnerships and their partners, including: (1) providing for symmetrical adjustments that both increase and decrease the amount of tax owed; (2) permitting upper-tier partnerships to modify any reported underpayment based on the tax attributes of their partners, even when those attributes were not included in the audited partnership’s information statements; (3) providing a mechanism for partnerships to pay any interest and penalties owed by non-U.S. partners, if those partners have provided consent; (4) establishing a process by which a partnership could apply for a short-term extension of the period to provide information statements to partners; (5) providing further guidance on how upper-tier pass-through entities not otherwise subject to the new partnership audit rules apply the rules if they receive adjusted tax information statements from a lower-tier partnership under Section 6226; and (6) providing a mechanism to permit taxpayers provide evidence they should be entitled to use foreign tax credits following an audit adjustment.