The commissioners of the IRS Large Business and International Division and the Small Business/Self-Employed Division, who together oversee all business taxpayers, issued a memorandum on June 29 to all IRS frontline managers and examiners on how to initiate contact with taxpayers in certain partnership examinations.

Specifically, the memorandum addresses early elections into the new, centralized partnership examination rules under the Bipartisan Budget Act of 2015 (BBA). Under the BBA, and temporary regulations promulgated in 2016, partnerships with tax periods beginning after Nov. 2, 2015, and before Jan. 1, 2018, may elect to use the BBA procedures if they are examined.

The IRS recently issued proposed regulations under the BBA, which replace the current partnership examination rules under the Tax Equity and Fiscal Responsibility Act of 1982, which become effective for tax years beginning after Dec. 31, 2017. The early election rules are limited in scope, and require eligible partnerships to make an affirmative election within 30 days of receiving an initial contact letter (Letter 2205-D). This early election into the BBA rules is irrevocable and must be made on new Form 7036, "Election Under Section 1101(g)(4) of the Bipartisan Budget Act of 2015," or on an election statement that must contain certain taxpayer information.

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