부산대학교 도서관

Purpose This paper aims to explain how the Bipartisan Budget Act of 2015, as modified by the Protecting Americans from Tax Hikes Act of 2015, changes the way the US Internal Revenue Service will conduct audits of collective investment vehicles treated as partnerships for US tax purposes. Design/methodology/approach This study explains the entities covered by the new partnership audit regime, the effective dates of the new regime and steps to be taken by funds covered by the new audit regime. Findings The results show that the new regime creates a liability at the partnership level for any unpaid tax, placing the tax burden on current-year partners. Practical implications A fund manager should determine whether the new audit regime is applicable to any of the funds he or she is managing and, if so, amend the fund documents to accommodate the new audit rules, providing a mechanism to elect and supervise a partnership representative, a mechanism to allocate the economic burden of the tax to the appropriate partners and a procedure for selecting the method to calculate the amount of the fund’s tax liability attributable to an audit. Originality/value This study provides practical guidance from experienced investment, fund and tax lawyers.