ALTERNATIVE PROCEDURE TO FILING AMENDED RETURNS FOR PURPOSES OF MODIFYING IMPUTED UNDERPAYMENT.

SEC. 203. ALTERNATIVE PROCEDURE TO FILING AMENDED RETURNS FOR PURPOSES OF MODIFYING IMPUTED UNDERPAYMENT. (a) In General.—Section 6225(c)(2) is amended to read as follows: “(2) Procedures for partners to take adjustments into account.— “(A) Amended returns of partners.—Such procedures shall provide that if— “(i) one or more partners file returns for the taxable year of the partners which includes the end of the reviewed year of the partnership (and for any taxable year with respect to which any tax attribute is affected by reason of any adjustment referred to in clause (ii)), “(ii) such returns take into account all adjustments under subsection (a) properly allocable to such partners (and the effect of such adjustments on any tax attributes), and “(iii) payment of any tax due is included with such returns, then the imputed underpayment amount shall be determined without regard to the portion of the adjustments so taken into account. “(B) Alternative procedure to filing amended returns.—Such procedures shall provide that, with respect to any partner referred to in subparagraph (A), the requirements of subparagraph (A) shall be treated as satisfied with respect to adjustments properly allocable to such partner if, in lieu of filing the returns described in such subparagraph— “(i) the amounts described in subparagraph (A)(iii) are paid by the partner, “(ii) the partner agrees to take into account, in the form and manner prescribed by the Secretary, the adjustments to the tax attributes of such partner referred to in subparagraph (A)(ii), and “(iii) such partner provides, in the form and manner specified by the Secretary (including, if the Secretary so specifies, in the same form as on an amended return), such information as the Secretary may require to carry out this subparagraph. “(C) Reallocation of distributive share.—In the case of any adjustment which reallocates the distributive share of any item from one partner to another, this paragraph shall apply with respect to any such partner only if the requirements of subparagraph (A) or (B) are satisfied with respect to all partners affected by such adjustment. “(D) Application of statute of limitations.—In the case of adjustments referred to in subparagraph (A)(ii), sections 6501 and 6511 shall not apply with respect to any return filed for purposes of subparagraph (A)(i) or any amount paid under subparagraph (A)(iii) or (B)(i). “(E) Adjustments to tax attributes binding for affected taxable years of partner.—The adjustments to the tax attributes of any partner provided for in subparagraph (A)(ii) or (B)(ii) shall be binding with respect to the taxable year of the partner which includes the end of the reviewed year of the partnership and any taxable years for which any tax attribute is affected by such adjustment. Any failure to so treat any such tax attribute shall be treated for purposes of this title in the same manner as a failure to treat a partnership-related item in a manner which is consistent with the treatment of such item on the partnership return within the meaning of section 6222. “(F) Application to partnerships and s corporations in tiered structures.— “(i) In general.—In the case of any partnership any partner of which is a partnership, subparagraph (A) or (B) may apply with respect to any partner (hereafter in this subparagraph referred to as the ‘relevant partner’) in the chain of ownership of such partnerships if— “(I) such information as the Secretary may require is furnished to the Secretary for purposes of carrying out this paragraph with respect to such partnerships (including any information the Secretary may require with respect to any chain of ownership of the relevant partner), and “(II) to such extent as the Secretary may require, each partnership in the chain of ownership between the relevant partner and the audited partnership satisfies the requirements of subparagraph (A) or (B). “(ii) Treatment of s corporations.—For purposes of clause (i), an S corporation and its shareholders shall be treated in the same manner as a partnership and its partners.” . (b) [26 U.S.C. 6201] Conforming Amendment.—Section 6201(a)(1)is amended by inserting “(or payments under section 6225(c)(2)(B)(i))” after “returns or lists”.