As treasurer of our club, I would like to have a simple
understandable way to explain to our members why opting out
of CPAR is beneficial to the club and members. I guess I
don't totally understand it myself. I did opt out this year
for the first time. I did it on Bivio's recommendation but
would like to understand why.
Laurie Frederiksen on
Some of the reasons we recommend you opt out if you can are:
A. It makes it harder for the IRS to audit your club
B. It keeps future club members from having to pay any IRS penalties assessed for past years when they may not have even been in the club.
C. It means that if you have to amend a tax filing, you don't need to work with an accountant to do it correctly.
Laurie Frederiksen Invest with your friends! www.bivio.com
As treasurer of our club, I would like to have a simple
understandable way to explain to our members why opting out
of CPAR is beneficial to the club and members. I guess I
don't totally understand it myself. I did opt out this year
for the first time. I did it on Bivio's recommendation but
would like to understand why.
Carol True on
Am I correct in thinking that any auditing would be on the member level and not on the club level? Not that I expect any auditing as I am 99% sure our return is correct. In the past my thinking was that it would be easier for me to deal with an audit on the club level as I seem to be the only one that understands taxes. Also, we are a pretty closed club with no new members expected.
On Thu, Mar 24, 2022, 10:27 AM Laurie Frederiksen <laurie@bivio.biz> wrote:
Some of the reasons we recommend you opt out if you can are:
A. It makes it harder for the IRS to audit your club
B. It keeps future club members from having to pay any IRS penalties assessed for past years when they may not have even been in the club.
C. It means that if you have to amend a tax filing, you don't need to work with an accountant to do it correctly.
Laurie Frederiksen Invest with your friends! www.bivio.com
As treasurer of our club, I would like to have a simple
understandable way to explain to our members why opting out
of CPAR is beneficial to the club and members. I guess I
don't totally understand it myself. I did opt out this year
for the first time. I did it on Bivio's recommendation but
would like to understand why.
Peter Dunkelberger on
In my humble opinion, I would take no action that makes it easier for the IRS to do an audit on tiny organizations that normally pay no taxes but file only information returns.
If you do not opt out, and if your organization gets audited, the partnership (if I understand the rules correctly) could have to pay for any underpayment as a result of inaccurate reporting to the partners. The incorrect reporting that led to partners' underpayment could have occurred a few years ago, but if you have not opted out of the CPAR, the current partners will have to pay. This facilitates the audit process. The IRS does not have to assess each individual partner, and only those partners who were in the partnership at the time of the underpayment.
\Whereas if you opt out, the IRS has to discover that some partner underpaid, discover that the underpayment was the result of inaccurate reporting by the partnership to the partners during the period being audited, audit the partnership, and then find each partner and assess them. I don't know, but there might be an extra step to confirm that each partner reported the same information inaccurately and underpaid taxes before the IRS assesses those partners. I am not that familiar with the process.
Or they could first find that the partnership filed something inaccurately, which led to inaccurate reporting to the partners, which led to an underpayment.
The bottom line is that it is more difficult for the IRS to undertake an audit of a small partnership if you opt out of CPAR. And the IRS, while full of hardworking people who want to do their best, is not performing at a stellar level. Not necessarily the fault of the IRS--it is an organization beset by many people who do not want it to perform well, and that puts a bigger burden on all of us.
Peter Dunkelberger
Sumner Stock Selectors Investment Club
On Thu, Mar 24, 2022 at 11:27 AM Laurie Frederiksen <laurie@bivio.biz> wrote:
Some of the reasons we recommend you opt out if you can are:
A. It makes it harder for the IRS to audit your club
B. It keeps future club members from having to pay any IRS penalties assessed for past years when they may not have even been in the club.
C. It means that if you have to amend a tax filing, you don't need to work with an accountant to do it correctly.
Laurie Frederiksen Invest with your friends! www.bivio.com
As treasurer of our club, I would like to have a simple
understandable way to explain to our members why opting out
of CPAR is beneficial to the club and members. I guess I
don't totally understand it myself. I did opt out this year
for the first time. I did it on Bivio's recommendation but
would like to understand why.
Peter Dunkelberger on
I think it is pretty much both. A partnership is audited, and then the partners. Or, a partner gets audited, leading to questions about the partnership reporting and the result is an audit of the partnership. I do not know which one is more frequently the case. The CPAR eliminates assessment of each individual partner who were partners at the time of the inaccurate reporting by the partnership. Any assessment will happen at the partnership level and the partners at the time of the assessment take the hit.
Am I correct in thinking that any auditing would be on the member level and not on the club level? Not that I expect any auditing as I am 99% sure our return is correct. In the past my thinking was that it would be easier for me to deal with an audit on the club level as I seem to be the only one that understands taxes. Also, we are a pretty closed club with no new members expected.
On Thu, Mar 24, 2022, 10:27 AM Laurie Frederiksen <laurie@bivio.biz> wrote:
Some of the reasons we recommend you opt out if you can are:
A. It makes it harder for the IRS to audit your club
B. It keeps future club members from having to pay any IRS penalties assessed for past years when they may not have even been in the club.
C. It means that if you have to amend a tax filing, you don't need to work with an accountant to do it correctly.
Laurie Frederiksen Invest with your friends! www.bivio.com
As treasurer of our club, I would like to have a simple
understandable way to explain to our members why opting out
of CPAR is beneficial to the club and members. I guess I
don't totally understand it myself. I did opt out this year
for the first time. I did it on Bivio's recommendation but
would like to understand why.
Kevin Gillogly on
Can someone refresh my memory. What's CPAR. We are talking as if everyone knows what you are talking about. I don't know.
I think it is pretty much both. A partnership is audited, and then the partners. Or, a partner gets audited, leading to questions about the partnership reporting and the result is an audit of the partnership. I do not know which one is more frequently the case. The CPAR eliminates assessment of each individual partner who were partners at the time of the inaccurate reporting by the partnership. Any assessment will happen at the partnership level and the partners at the time of the assessment take the hit.
Am I correct in thinking that any auditing would be on the member level and not on the club level? Not that I expect any auditing as I am 99% sure our return is correct. In the past my thinking was that it would be easier for me to deal with an audit on the club level as I seem to be the only one that understands taxes. Also, we are a pretty closed club with no new members expected.
On Thu, Mar 24, 2022, 10:27 AM Laurie Frederiksen <laurie@bivio.biz> wrote:
Some of the reasons we recommend you opt out if you can are:
A. It makes it harder for the IRS to audit your club
B. It keeps future club members from having to pay any IRS penalties assessed for past years when they may not have even been in the club.
C. It means that if you have to amend a tax filing, you don't need to work with an accountant to do it correctly.
Laurie Frederiksen Invest with your friends! www.bivio.com
As treasurer of our club, I would like to have a simple
understandable way to explain to our members why opting out
of CPAR is beneficial to the club and members. I guess I
don't totally understand it myself. I did opt out this year
for the first time. I did it on Bivio's recommendation but
would like to understand why.
I think it is pretty much both. A partnership is audited, and then the partners. Or, a partner gets audited, leading to questions about the partnership reporting and the result is an audit of the partnership. I do not know which one is more frequently the case. The CPAR eliminates assessment of each individual partner who were partners at the time of the inaccurate reporting by the partnership. Any assessment will happen at the partnership level and the partners at the time of the assessment take the hit.
Am I correct in thinking that any auditing would be on the member level and not on the club level? Not that I expect any auditing as I am 99% sure our return is correct. In the past my thinking was that it would be easier for me to deal with an audit on the club level as I seem to be the only one that understands taxes. Also, we are a pretty closed club with no new members expected.
On Thu, Mar 24, 2022, 10:27 AM Laurie Frederiksen <laurie@bivio.biz> wrote:
Some of the reasons we recommend you opt out if you can are:
A. It makes it harder for the IRS to audit your club
B. It keeps future club members from having to pay any IRS penalties assessed for past years when they may not have even been in the club.
C. It means that if you have to amend a tax filing, you don't need to work with an accountant to do it correctly.
Laurie Frederiksen Invest with your friends! www.bivio.com
As treasurer of our club, I would like to have a simple
understandable way to explain to our members why opting out
of CPAR is beneficial to the club and members. I guess I
don't totally understand it myself. I did opt out this year
for the first time. I did it on Bivio's recommendation but
would like to understand why.
Peter Dunkelberger on
CPAR: "The BBA (n.b. Bipartisan Budget Act) centralized partnership audit regime ...Under the BBA centralized partnership audit regime, the IRS generally assesses and collects any understatement of tax (imputed underpayment) at the partnership level."
I think it is pretty much both. A partnership is audited, and then the partners. Or, a partner gets audited, leading to questions about the partnership reporting and the result is an audit of the partnership. I do not know which one is more frequently the case. The CPAR eliminates assessment of each individual partner who were partners at the time of the inaccurate reporting by the partnership. Any assessment will happen at the partnership level and the partners at the time of the assessment take the hit.
Am I correct in thinking that any auditing would be on the member level and not on the club level? Not that I expect any auditing as I am 99% sure our return is correct. In the past my thinking was that it would be easier for me to deal with an audit on the club level as I seem to be the only one that understands taxes. Also, we are a pretty closed club with no new members expected.
On Thu, Mar 24, 2022, 10:27 AM Laurie Frederiksen <laurie@bivio.biz> wrote:
Some of the reasons we recommend you opt out if you can are:
A. It makes it harder for the IRS to audit your club
B. It keeps future club members from having to pay any IRS penalties assessed for past years when they may not have even been in the club.
C. It means that if you have to amend a tax filing, you don't need to work with an accountant to do it correctly.
Laurie Frederiksen Invest with your friends! www.bivio.com
As treasurer of our club, I would like to have a simple
understandable way to explain to our members why opting out
of CPAR is beneficial to the club and members. I guess I
don't totally understand it myself. I did opt out this year
for the first time. I did it on Bivio's recommendation but
would like to understand why.