Audit Shock: When the Partnership Pays the Tax

Under the BBA audit rules, the IRS no longer chases down individual partners for tax on audit adjustments. Instead, the partnership itself can be on the hook - leaving today’s partners paying for yesterday’s mistakes. This article breaks down how the rules work, including the imputed underpayment, the timing mismatch between the reviewed year and the adjustment year, the push-out election that can shift the burden back to reviewed-year partners, and provides some practice pointers.