OTHER TECHNICAL CORRECTIONS RELATED TO PARTNERSHIP AUDIT RULES.

SEC. 206. OTHER TECHNICAL CORRECTIONS RELATED TO PARTNERSHIP AUDIT RULES. (a) Limitation on Amendment of Statements Furnished to Partners Not Applicable to Partnerships Electing Out of Partnership Audit Rules.—Section 6031(b) is amended by striking the last sentence and inserting the following: “Information required to be furnished by the partnership under this subsection may not be amended after the due date of the return under subsection (a) to which such information relates, except— “(1) in the case of a partnership which has elected the application of section 6221(b) for the taxable year, “(2) as provided in the procedures under section 6225(c), “(3) with respect to statements under section 6226, or “(4) as otherwise provided by the Secretary.” . (b) Administrative Adjustment Request and Partnership Adjustment Tracking Report Not Treated as Amended Return for Purposes of Modification of Imputed Underpayments.—Section 6225(c)(2), as amended by the preceding provisions of this Act, is amended by adding at the end the following new subparagraph: “(F) Adjustments not treated as amended return.—An administrative adjustment request under section 6227 and a partnership adjustment tracking report under section 6226(b)(4)(A) shall not be treated as a return for purposes of this paragraph.” . (c) Authority to Require e-filing of Materials in Connection With Modification of Imputed Underpayments, etc.—Section 6241, as amended by the preceding provisions of this Act, is amended by adding at the end the following new paragraph: “(10) Authority to require electronic filing.—Notwithstanding section 6011(e), the Secretary may require that anything required to be filed or submitted under section 6225(c), or to be furnished to or filed with the Secretary under section 6226, be so filed, submitted, or furnished by magnetic media or in other machine-readable form.” . (d) Clarification of Assessment Authority.—Section 6226(a) is amended by inserting “(and no assessment of tax, levy, or proceeding in any court for the collection of such underpayment shall be made against such partnership)” after “section 6225 shall not apply with respect to such underpayment”. (e) Treatment of Partnership Adjustments That Result in Decrease in Tax in Case of Election to Push Out Adjustments.—Section 6226(b) is amended— (1) by striking “increased” in paragraph (1) and inserting “adjusted”, (2) by striking “adjustment amounts” each place it appears in paragraphs (1) and (2) and inserting “correction amounts”, (3) by striking “increase” each place it appears in subparagraphs (A) and (B) of paragraph (2) and inserting “increase or decrease”, (4) by striking “plus” at the end of paragraph (2)(A) and inserting “and”, and (5) by striking “Adjustment amounts” in the heading of paragraph (2) and inserting “Correction amounts”. (f) [10 U.S.C. 6227] Coordination of Statute of Limitation on Filing Administration Adjustment Request With Adjustments Related to Foreign Tax Credits.—Section 6227is amended by adding at the end the following new subsection: “(d) Coordination With Adjustments Related to Foreign Tax Credits.—The Secretary shall issue regulations or other guidance which provide for the proper coordination of this section and section 905(c).” . (g) Clarification of Assessment of Imputed Underpayments.— (1) In general.—Section 6232(a) is amended by striking “except that in the case of” and all that follows and inserting the following: “except that— “(1) subchapter B of chapter 63 shall not apply, and “(2) in the case of an administrative adjustment request to which section 6227(b)(1) applies, the underpayment shall be paid and may be assessed when the request is filed.” . (2) Conforming amendment.—Section 6232(b) is amended— (A) by striking “assessment of a deficiency” and inserting “assessment of an imputed underpayment”, and (B) by adding at the end the following new flush matter:“ ‘The preceding sentence shall not apply in the case of a specified similar amount (as defined in subsection (f)(2)).’ ”. (h) Time Limitation for Notice of Proposed Adjustment.— (1) In general.—Section 6231 is amended by redesignating subsections (b) and (c) as subsections (c) and (d), respectively, and by inserting after subsection (a) the following new subsection: “(b) Timing of Notices.— “(1) Notice of proposed partnership adjustment.—Any notice of a proposed partnership adjustment shall not be mailed later than the date determined under section 6235 (determined without regard to paragraphs (2) and (3) of subsection (a) thereof). “(2) Notice of final partnership adjustment.— “(A) In general.—Except to the extent that the partnership elects to waive the application of this subparagraph, any notice of a final partnership adjustment shall not be mailed earlier than 270 days after the date on which the notice of the proposed partnership adjustment is mailed. “(B) Statute of limitations on adjustment.—For the period of limitations on making adjustments, see section 6235.” . (2) Conforming amendment.—Section 6231(a) is amended by striking “Any notice of a final partnership adjustment” and all that follows through “Such notices” and inserting “Any notice of a final partnership adjustment”. (i) [26 U.S.C. 6233] Deposit to Suspend Interest on Imputed Underpayment.—Section 6233is amended by adding at the end the following new subsection: “(c) Deposit to Suspend Interest.—For rules allowing deposits to suspend running of interest on potential underpayments, see section 6603.” . (j) Deposit to Meet Jurisdictional Requirement.—The first sentence of section 6234(b) is amended by striking “the amount of the imputed underpayment (as of the date of the filing of the petition)” and inserting “the amount of (as of the date of the filing of the petition) the imputed underpayment, penalties, additions to tax, and additional amounts with respect to such imputed underpayment”. (k) Corrections Related to Period of Limitation on Making Adjustments.— (1) Section 6235(a) is amended— (A) by inserting “or section 905(c)” after “Except as otherwise provided in this section”, and (B) by striking “subpart” and inserting “subchapter”. (2) Section 6235(a)(3) is amended by striking “section 6225(c)(7)” and inserting “section 6225(c)(7))”. (3) Section 6235(c)(2) is amended by striking “section 6501(e)(1)(A)” and inserting “subparagraph (A) or (C) of section 6501(e)(1)”. (4) Section 6235(c) is amended by adding at the end the following new subparagraphs: “(5) Information required to be reported.—In the case of a partnership that is required to report any information described in section 6501(c)(8), the time for making any adjustment under this subchapter with respect to any tax return, event, or period to which such information relates shall not expire before the date that is determined under section 6501(c)(8). “(6) Listed transactions.—If a partnership fails to include on any return or statement any information with respect to a listed transaction as described in section 6501(c)(10), the time for making any adjustment under this subchapter with respect to such transaction shall not expire before the date that is determined under section 6501(c)(10).” . (5) Section 6235 is amended by striking subsection (d). (l) Treatment of Special Enforcement Matters.—Section 6241, as amended by the preceding provisions of this Act, is amended by adding at the end the following new paragraph: “(11) Treatment of special enforcement matters.— “(A) In general.—In the case of partnership-related items which involve special enforcement matters, the Secretary may prescribe regulations pursuant to which— “(i) this subchapter (or any portion thereof) does not apply to such items, and “(ii) such items are subject to such special rules (including rules related to assessment and collection) as the Secretary determines to be necessary for the effective and efficient enforcement of this title. “(B) Special enforcement matters.—For purposes of subparagraph (A), the term ‘special enforcement matters’ means— “(i) failure to comply with the requirements of section 6226(b)(4)(A)(ii), “(ii) assessments under section 6851 (relating to termination assessments of income tax) or section 6861 (relating to jeopardy assessments of income, estate, gift, and certain excise taxes), “(iii) criminal investigations, “(iv) indirect methods of proof of income, “(v) foreign partners or partnerships, and “(vi) other matters that the Secretary determines by regulation present special enforcement considerations.” . (m) [26 U.S.C. 6241] United States Shareholders and Certain Other Persons Treated as Partners.—Section 6241, as amended by the preceding provisions of this Act,is amended by adding at the end the following new paragraph: “(12) United states shareholders and certain other persons treated as partners.— “(A) In general.—Except as otherwise provided by the Secretary, in the case of any controlled foreign corporation (as defined in section 957 or 953(c)(1)) which is a partner of a partnership, each United States shareholder (as defined in section 951(b) or 953(c)(1)) with respect to such controlled foreign corporation shall be treated for purposes of this subchapter as a partner of such partnership. For purposes of the preceding sentence, any distributive share of any such United States shareholder with respect to such partnership shall, except as otherwise provided by the Secretary, be equal to such United States shareholder’s pro rata share with respect to such controlled foreign corporation (determined under rules similar to the rules of section 951(a)(2)). “(B) Passive foreign investment companies.—For purposes of subparagraph (A), in the case of a passive foreign investment company (as defined in section 1297), each taxpayer that makes an election under section 1295 with respect to such company shall be treated in the same manner as United States shareholders under subparagraph (A), except that such taxpayer’s pro rata share with respect to the passive foreign investment company shall be determined under rules similar to the rules of section 1293(b). “(C) Regulations or other guidance.—The Secretary shall issue such regulations or other guidance as is necessary or appropriate to carry out the purposes of this paragraph, including regulations which apply the rules of subparagraph (A) in similar circumstances or with respect to similarly situated persons.” . (n) Penalties Related to Administrative Adjustment Requests and Partnership Adjustment Tracking Reports.— (1) Failure to pay.—Section 6651 is amended by redesignating subsection (i) as subsection (j) and by inserting after subsection (h) the following new subsection: “(i) Application to Imputed Underpayment.—For purposes of this section, any failure to comply with section 6226(b)(4)(A)(ii) shall be treated as a failure to pay the amount described in subclause (II) thereof and such amount shall be treated for purposes of this section as an amount shown as tax on a return specified in subsection (a)(1).” . (2) [26 U.S.C. 6698] Failure to file partnership adjustment tracking report.—Section 6698(a)is amended— (A) in the matter preceding paragraph (1) by inserting “, or a partnership adjustment tracking report under section 6226(b)(4)(A),” after “under section 6031”, (B) in paragraph (1) by inserting “, or such report,” after “such return”, and (C) in paragraph (2)— (i) by inserting “or a report” after “a return”, and (ii) by inserting “or 6226(b)(4)(A), respectively” before the comma at the end. (3) Tax return preparer related penalties.—Section 6696(e)(1) is amended by inserting “, any administrative adjustment request under section 6227, and any partnership adjustment tracking report under section 6226(b)(4)(A)” before the period at the end. (4) Frivolous tax submissions.—Section 6702 is amended by adding at the end the following new subsection: “(f) Partnership Adjustments.—An administrative adjustment request under section 6227 and a partnership adjustment tracking report under section 6226(b)(4)(A) shall be treated as a return for purposes of this section.” . (o) Adjusted Schedule K-1 Treated as Payee Statement.—Section 6724(d)(2) is amended by striking “or” at the end of subparagraph (HH), by striking the period at the end of subparagraph (II) and inserting “, or”, and by inserting after subparagraph (II) the following new subparagraph: “(JJ) section 6226(a)(2) (relating to statements relating to alternative to payment of imputed underpayment by partnership) or under any other provision of this title which provides for the application of rules similar to such section.” . (p) Other Clerical Corrections.— (1) Section 6225(c)(7) is amended by striking “submitted pursuant to paragraph (1)” and inserting “filed or submitted under this subsection”. (2) Section 6227(b) is amended by striking “is made” both places it appears and inserting “is filed”. (3) Section 6227(b)(1) is amended by striking “paragraphs (2), (6), and (7)” and inserting “paragraphs (2), (7), and (9)”. (4) Section 6232(b) is amended by striking “this chapter” and inserting “this subtitle (other than subchapter B of this chapter)”. (5) Section 6232(d)(1)(A) is amended by striking “a item” and inserting “an item”. (6) Section 6232(e) is amended by striking “thereof”. (7) Section 6241(5) is amended by striking “sections 6234” and inserting “section 6234”. (8) Section 7485(b) is amended by striking “a partner” and inserting “the partnership”. (9) [26 U.S.C. 6221] The heading of the first part of subchapter C of chapter 63is amended to read as follows: “PART I—IN GENERAL” . (10) [26 U.S.C. 6225] The heading of the second part of subchapter C of chapter 63is amended to read as follows: “PART II—PARTNERSHIP ADJUSTMENTS” . (11) [26 U.S.C. 6231] The heading of the third part of subchapter C of chapter 63is amended to read as follows: “PART III—PROCEDURE” . (12) [26 U.S.C. 6241] The heading of the fourth part of subchapter C of chapter 63is amended to read as follows: “PART IV—DEFINITIONS AND SPECIAL RULES” .