George Hani commented on the Internal Revenue Service's (IRS's) guidance on the new partnership audit regime, which takes effect January 1, 2018. The new guidance is generally favorable to taxpayers, Hani said, adding, "there was some fear that the rules would be narrowly construed and not permit push-outs through multiple tiers at all." The rules say that each pass-through partner in an ownership chain is given a choice to either push the adjustments to its partners, shareholders, or beneficiaries or pay tax with respect to the adjustments. Having options is always a good thing, and by taking this approach, the IRS shows it understands that pass-through partners aren't analogous to individual partners, he said. The proposed regulations also include a requirement that push-outs through tiers must occur before the extended due date for the adjustment year return of the lower-level partnership under audit. This requirement is workable, but will require taxpayers in a tiered structure to ensure everyone is filing and furnishing statements in a timely manner so that the highest-level partnerships don't run out of time to decide if they want to pay the tax or make the push-out election, Hani said. Regarding interest and penalties, the IRS's approach is reasonable and, for the most part, positive for taxpayers, he said. If a partnership has made a valid push-out election, the pass-through partner that receives a statement but fails to pay the tax or push out the liability will be the one subject to interest and penalties. "If the partnership you push out to somehow fails to comply, it's that partnership—the upper-level partnership—that is on the hook," Hani said, adding that this relief ensures that partners aren't penalized for something that isn't their fault.