Partnership/RAR Work Group
In 2015, Congress passed the Bipartisan Budget Act. Provisions in the BBA allow the IRS to conduct partnership-level audits and to assess the partnership, if necessary, as part of a centralized partnership audit regime. The MTC Uniformity Committee formed a work group to study the new federal audit process and make recommendations to states about statutes or rules for assessing the state taxes that will result from federal partnership audit adjustments. The MTC work group consulted closely with the AICPA, the ABA, the Council On State Taxation, and the Tax Executives Institute, along with others, to create a model statute.
In 2019, the Commission adopted the model RAR/Partnership Statute (link below) drafted by the work group. Since that time, the IRS has issued regulations and forms and the interaction of the model with the IRS audit process is continuing to be monitored by the work group, which may result in recommended changes to the model.
Short Summary of the Model
Document Library
2019 Model – Prior to Technical Corrections
2003 Model for Reporting Federal Tax Adjustments
Hearing Officer Report (2003 Model)
REVISED DRAFT MODEL – with Technical Corrections – as of October 2020
This model includes technical corrections submitted to the MTC Executive Committee and approved on November 20, 2020.
2020 Developments – Work Group Archives
- DRAFT – Model with Possible Changes – As of September 2020
- IRS Reg. 301.6225-3 adjustments that do not result in an imputed underpayment
- Notes from 9-16-20 Call
- IRS – Partnership Process Update – Revised PowerPoint Need to be uploaded to WordPress
- Centralized Partnership Audit/AAR Website with forms, final regulations, etc.
- Note that this is a link to the IRS website which contains information updated on a periodic basis. Older links to information on this page that have been superseded by this updated information below have been removed.
2019 Model RAR/Partnership Statute
- Model RAR/Partnership Statute – as adopted corrected July 2020
- Hearing Officer Report with proposed model attached as Appendix A Need to be Uploaded
- Model approved by Executive Committee Nov. 8th for Bylaw 7 Survey
Background Information
Agendas, working documents, and other project-related information from previous meetings:
- Proposed Model RAR Statute incorporating changes discussed at Uniformity Committee meeting 7/2018
- Minnesota Comments on Model Uniform Reporting Statute
- Letter from ABA supporting approval of the Model Uniform Reporting Statute
- Letter from Master Limited Partnership Association endorsing the proposed Model RAR Statute
- TEI’s Endorsement of the Model Uniform Statute and Regulation for Reporting Adjustments to Federal Taxable Income and Federal Partnership Items as of July 18, 2018
- AICPA Position Paper on State Partnership Audits
- Letter from COST endorsing the proposed Model RAR statutePartnership Work Group Staff Report – Comment – July 9, 2018
- Proposed Model RAR Statute – Interested Parties Version Incorporating Changes Related to Partnership Pays Election And Including Other Edits and Comments Throughout as of 6/27/18
- Proposed Model RAR Statute – Interested Parties Version with MTC staff edits 6-27-18
- Proposed Model RAR Statute – Interested Parties Version as of 6-25-18 with MTC staff edits 6-25-18
- Proposed Model RAR Statute – Interested Parties Version as of 4-27-18 with MTC staff edits 4-4-18
- Proposed Model RAR Statute – Interested Parties Version as of 4-27-18 with MTC staff edits 4-4-18 – REDLINE version
- Partnership Pays – Investment Income Option for review
- Partnership Pays – Nexus Issue proposals
- Partnership Work Group Staff Report – 6-18-18
- Discussion Draft – Antiabuse Provision
- Partnership Work Group Staff Report – 4-3-18
- Proposed Model RAR Statute – Interested Parties Version 5.1 as of 3-7-18 with MTC staff edits 1-23-18
- Proposed Model RAR Statute – Interested Parties Version 5.1 as of 1-3-18 with MTC staff edits 1-23-18
- Partnership Work Group Staff Report, Jan. 11, 2018
- Proposed Model RAR Statute – Interested Parties’ Version of MTC Draft, January 3, 2018
- Proposed Model RAR Statute – Interested Parties’ Version of MTC Draft, December 20, 2017
- Explanation of Key Modifications to MTC Draft by Interested Parties, December 20, 2017
- Partnership Work Group Staff Report, October 25 2017
- Partnership Model – Attachment A As Proposed by Interested Parties
- Partnership Model – Attachment B Changes and Comments
- Partnership Model – Attachment C Changes Accepted – Clean
- Draft version of Model Conformity/RAR Act – Revised Draft Version #3 Submitted for Consideration on September 27, 2017
- Partnership Work Group Staff Report
- Draft version of Model Conformity/RAR Act – Revised Draft Version #2 Submitted for Consideration on July 5, 2017
- Draft version of Model Conformity/RAR Act
- Presentation of draft version of Model Conformity/RAR Act by interested parties [Link will open in PPT]
- Partnership Work Group Staff Report, May 18, 2017
- Interactive Slides Illustrating Partnership Audit Rules PowerPoint
- Partnership Presentation to Uniformity Committee – 3/8/17
- Evaluation of the “Push-Out” Election in its Current Form
- Report on federal changes to partnership rules – Bruce Fort, MTC, December 10, 2015
Materials related to federal legislative revisions to the partnership audit regime:
- GAO Report: With Growing Number of Partnerships, IRS Needs to Improve Audit Efficiency
- IRC Partnership Audit and Adjustment Provisions Effective after 12-31-17
- IRC Partnership Audit and Adjustment Provisions Effective after 12-31-17 with proposed tech corrections
- Joint Committee Analysis of Technical Corrections Bill
- Technical Corrections Bill – HR 6439
- AICPA Comments to Congress on Proposed Legislative Revisions to the Partnership Audit Regime
- Joint Committee – BBA Blue Book
- Bipartisan Budget Act of 2015
Proposal from ABA/AICPA Task Force for Uniform Model RAR Statute
- Draft ABA-AICPA Checklist for Partnership Conformity 1-27-17
- ABA Comments
- AICPA position paper: Reporting to State Tax Authorities of Federal Tax Examination Adjustments and Their Effect on State Tax Liability
- AICPA Letter to MTC re: Position Paper, dated 3/1/2017
- TEI State and Local Tax Policy Statement
- 2016 Survey – Reportable Adjustments
- Proposed Amended RAR Draft
- Letter from COST, TEI, the ABA SALT Committee, and the AICPA State Tax Working Group
- Proposed Model Report of Federal Audit Changes developed by Tax Executives Institute
- COST Policy Statement
Other relevant publications:
- AICPA – New TQA on tax accounting considerations under the partnership audit regime
- Joint Committee on Taxation technical explanation of revenue provisions
- Eileen Reichenberg Sherr & Steven N.J. Wlodychak, State Challenges With the New Federal Partnership Audit Rules
- Marianne Evans, Dan De Jong, Shirley K. Sicilian, & Julia Flanagan, New Federal Partnership Audit Rules Create State Tax Issues
- Bruce P. Ely, Christopher R. Grissom & William T. Thistle, Blurred Lines: State Taxation of Nonresident Partners
- Partnerships & Partners: Who and How Much?
- New Partnership Audit Rules – Part 1
- New Partnership Audit Rules – Part 2
- “Business in the United States: Who Owns It and How Much Tax do They Pay?” – NYU School of Law Colloquium on Tax Policy and Public Finance
- Office of Tax Analysis: Business in the United States: Who Owns it and How Much Tax Do They Pay?
- Office of Tax Analysis: Methodology to Identify Small Businesses and Their Owners