Key takeaways

• The Treasury Department and the IRS have issued temporary regulations describing how partnerships may make an early election into the new partnership tax audit regime created by the Bipartisan Budget Act of 2015 (the "BBA").
• In general, an election must be made within 30 days of the date the partnership receives a notice from the IRS that a return of the partnership for an eligible taxable year has been selected for examination.  Many partnerships may not know the amount at stake in the audit within the timeframe provided by the IRS for making the election.
• The temporary regulations make clear that a partnership with 100 or fewer partners cannot take advantage of this early election provision to get out of the existing TEFRA partnership audit rules by electing into the BBA rules and then electing out.
• Many unresolved issues remain in the implementation of the BBA tax audit rules.  Unless the IRS addresses many of the open issues, partnerships should proceed with caution before electing into the regime early under these temporary regulations.