Bipartisan, Bicameral Tax Technical Corrections Bill Would Affect Partnership Audit Rules

first_imgCCH Tax Day ReportThe Tax Technical Corrections Bill has been introduced in the House (HR 6439) and the Senate (Sen 3506). The bicameral, bipartisan measure includes corrections and clarifications of to several recently enacted pieces of legislation, including the Bipartisan Budget Act of 2015 (P.L. 114-74). Because the 114th Congress is expected to adjourn shortly, it is not clear when lawmakers may take up this legislation.Some of the enacted legislation that would be affected by the bill includes the Consolidated Appropriations Act, 2016 (P.L. 114-113), which includes the Protecting Americans From Tax Hikes (PATH) Act of 2015; the Stephen Beck Jr., Achieving a Better Life Experience Act of 2014, which was part of the Tax Increase Prevention Act of 2014 (P.L. 113-295); the Fixing America’s Surface Transportation Act (P.L. 114-94); and the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 (P.L. 114-41).PartnershipsThe measure would clarify the scope of the partnership audit rules enacted in the Bipartisan Budget Act of 2015 and amended by the PATH Act, according to a technical explanation of the bill released by the Joint Committee on Taxation (JCT) (JCX-91-16). “The provision eliminates references to adjustments to partnership income, gain, loss, deduction, or credit, and instead refers to partnership-related items, defined as any item or amount with respect to the partnership that is relevant in determining the income tax liability of any person, without regard to whether the item or amount appears on the partnerships return and including an item or amount relating to any transaction with, basis in, or liability of the partnership,” the JCT explained.Moreover, the measure addresses certain tax adjustments for passthrough partners in tiered structures. Under the bill, generally partnerships would be able to push tax adjustments through a tiered partnership during an audit, the JCT noted.Other ProvisionsThe PATH Act extended bonus depreciation. The measure clarifies that, among the criteria in the PATH Act defining certain property having a longer production period that is treated as qualified property, the requirement that the property be acquired under a written contract before 2020 requires that the contract be a written binding contract. “This corrects an unintended error which changed prior law,” the JCT explained.The PATH Act also made permanent the American Opportunity Tax Credit (AOTC). The measure eliminates deadwood and consolidates provisions of Code Sec. 25A, according to the JCT.Additionally, the PATH Act overhauled the rules for individual taxpayer identification numbers (ITINs). The measure clarifies certain provisions affecting expiration of ITINs, the JCT noted.By Jessica Jeane, Wolters Kluwer News StaffTax Technical Corrections Act of 2016, HR 6439last_img