The centralized partnership audit procedures under the Bipartisan Budget Act of 2015 (BBA), P.L. 114-74, became effective for partnerships with tax years beginning after Dec. 31, 2017. As a result, calendar-year partnerships must consider the impact of the BBA when filing their 2018 returns.

Under the BBA, the IRS will conduct an examination at the partnership level to determine the accuracy of the partnership's tax return. If the examination results in an underpayment of tax, the partnership may pay the underpayment on behalf of the partners or "push out" the underpayment, as well as the responsibility for payment, to the individual partners.

Decisions on behalf of the partnership vis-à-vis the IRS examination are made by a single individual: the partnership representative (PR), or, if the PR is an entity, the designated individual (DI). The power of the PR and DI cannot be overstated. Under the BBA, the PR and DI have the sole authority to act on behalf of the partnership and its partners, and the PR's actions are binding on them. This is a marked change from the role of the tax matters partner (TMP) under the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), P.L. 97-248, which generally governed partnerships' examinations before the enactment of the BBA.

This item discusses issues partnerships and their advisers should consider when designating a PR or DI, accounting for the potential for conflicts of interest, whether and to what extent limitations can be placed on the PR or DI, and how these roles differ dramatically from that of the TMP.

Who may serve as the PR?