Have a Partnership?
You may be sad to hear how the IRS has been failing to audit you. While they manage to audit about 27% of large corps, they only get around to about 0.8% of large partnerships. The income/loss is generated by one entity, but taxed at multiple others. If your partnership makes a boo boo, they then have to investigate you and all your buddy partners to recoup that tax money. This is neither fun nor efficient. So, in an effort to produce an estimated $9.3 billion/year, the IRS has now developed the “centralized partnership audit regime” (CPAR.) Unless you elect out, annually, if the IRS finds that boo boo, they can assess taxes directly to the partnership at the top rate, like a C-corp. Ouch. Interested in an off-ramp? Let’s talk. PS States are looking for their own CPAR band wagons.