Partnerships subject to the centralized partnership audit regime under the Bipartisan Budget Act of 2015 (BBA) must file an administrative adjustment request (AAR) to adjust already-filed partnership returns. The IRS provided a short period for BBA partnerships to file an amended return rather than an AAR, but that period expired on Sept. 29, 2020. Partnerships need to understand the process for filing AARs and the choices required as part of that process.
When can an AAR be filed?
Generally, partnerships have three years from the later of the date the partnership return was filed or the unextended due date for filing the partnership return to file an AAR. However, no AAR may be filed after the IRS has issued a notice of administrative proceeding (NAP) to the partnership and the partnership representative. A NAP is the statutorily required notice informing a BBA partnership that it is being audited. A BBA partnership still may file an AAR after receiving an IRS notice of selection for examination, which is sent only to the partnership and generally is sent before the NAP.