Law360 Quotes Bill Nelson on North Carolina’s New Partnership Tax Audit Rules

Smith Anderson tax partner Bill Nelson was featured by Law360 Tax Authority in an article examining key changes included in North Carolina’s recently enacted omnibus tax bill, S.B. 595, including the state’s adoption of Multistate Tax Commission (MTC) guidance for handling partnership tax audits.

The legislation aligns North Carolina with a model statute developed to help states address partnership audits following changes to federal audit procedures under the Bipartisan Budget Act of 2015. North Carolina’s adoption of the model represents another step toward greater uniformity and simplicity among states, an important consideration for businesses operating across multiple jurisdictions.

Bill told Law360 that following the model statute improves communication between federal and state audit regimes and gives state tax authorities a more consistent framework for enforcing partnership audit adjustments. He noted that a primary concern for multistate taxpayers was the potential for states to develop separate and conflicting procedures.

“I think from a taxpayer perspective, what we were worried about, on a multistate level, was if the states just start trying to deal with this independently, it’s just going to create procedural chaos,” Bill said. “There’ll be 50 different regimes, and so it was an effort to promote uniformity.”

The MTC model also addresses how taxpayers may handle federal audit adjustments that result in state tax overpayments, including allowing partners to report those adjustments to the state and pursue applicable refund claims.

Subscribers can read the full Law360 article, “Omnibus Tax Bill Holds Key Developments for North Carolina,” to learn more about the partnership audit provisions and other tax changes included in the legislation.