Issue Number:  2026-03

Inside This Issue

1. BBA Centralized Partnership Audit Regime
2. Designate a Partnership Representative
3. Elect Out of the Centralized Partnership Audit Regime
4. File an Administrative Adjustment Request under Bipartisan Budget Act of 2015 (BBA)
5. BBA Partnership Audit Process
6. Electronic Submission of Forms by Audited BBA Partnerships and Their Pass-Through Partners
7. OFSS Status

1.  BBA Centralized Partnership Audit Regime

NO UPDATE

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2.  Designate a Partnership Representative

NO UPDATE

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3.  Elect Out of the Centralized Partnership Audit Regime

NO UPDATE

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4.  File an Administrative Adjustment Request under Bipartisan Budget Act of 2015 (BBA)

NO UPDATE

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5.  BBA Partnership Audit Process

Reminder: IRC §6603 Deposits for BBA Partnership Partners

Partners of a BBA partnership may make an IRC §6603 deposit to suspend the running of interest on a potential underpayment related to partnership adjustments.

These deposits cannot be made electronically. The partner must submit a check or money order with a written statement clearly designating the remittance as an IRC §6603 deposit. The statement should include:

• BBA partnership name and TIN;
• Reviewed year and Audit Control Number (ACN);
• Amount and basis of the disputable tax; and
• The partner’s estimated allocable share, including tax, interest, and penalties.

The deposit should preferably be sent to the IRS office examining the partnership return or, alternatively, to the Service Center where the partner files its return.

Important Account Information

When initially processed, the deposit is identified as Transaction Code (TC) 640 with Designated Payment Code (DPC) 77 on taxpayer transcripts.

After the IRS receives the deposit and required statement, the funds are transferred to a suspense ledger, indicated by a TC 642 with DPC 77. At that point, the deposit will no longer appear as a credit on the taxpayer’s tax account.

The disappearance of the credit does not mean the deposit was lost or refunded. It reflects the IRS transfer of the §6603 deposit to separate suspense accounting ledger to prevent unintended refunds or application of the deposit.

Proper designation, by including the required statement, is important because an undesignated remittance generally may be treated as a payment rather than a §6603 deposit.

For additional information please review BBA partnership audit process | Internal Revenue Service (www.irs.gov/bbaaudit).

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6.  Electronic Submission of Forms by Audited BBA Partnerships and Their Pass-Through Partners

BBA Push-Out Reporting: September 15, 2026 Deadline Approaching

Act Now: File Timely and Electronically Through the BBA Portal (OFSS)

Pass-through partners that received Form 8986 as a result of a BBA partnership examination should take action now to meet the applicable filing requirements.

For affected pass-through partners, including partnerships, S corporations, and certain trusts, the extended due date may be September 15, 2026.

If You Are Further Pushing Out Adjustments

A pass-through partner that received Form 8986 and elects to further push the adjustments out to its reviewed-year partners must:

• Furnish Form 8986, Partner's Share of Adjustment(s) to Partnership-Related Item(s), to each reviewed-year partner.
• Complete Form 8985, Pass-Through—Statement Transmittal/Partnership Adjustment Tracking Report.
• Electronically submit Form 8985 and the related Forms 8986 to the IRS through the BBA Portal (OFSS).
• Complete these actions by the applicable extended due date.

If You Are Not Further Pushing Out Adjustments

A pass-through partner that does not further push out the adjustments by the extended due date must generally compute and pay an imputed underpayment (IU) based on the adjustments reported on Form 8986 it received.

The pass-through partner must also:

• Use Form 8985 to report the IU calculation and amount paid.
• Electronically submit Form 8985 to the IRS through the BBA Portal (OFSS).
• Make the required payment using an appropriate IRS payment method.

Failure to further push out the adjustments or timely submit Form 8985 may result in the IRS calculating the imputed underpayment and issuing a balance-due notice to the entity.

Don't Wait Until the Deadline

With September 15, 2026, extended due date approaching, taxpayers should begin preparing and submitting their BBA forms as soon as possible.

Allow enough time to:

• Verify partner information.
• Prepare Forms 8985 and 8986 accurately.
• Furnish Forms 8986 to the appropriate partners.
• Electronically submit the required forms through the BBA Portal (OFSS).
• Address any submission issues before the deadline.

Remember: Furnishing Forms 8986 to your partners does not complete your IRS filing requirement. When required, Form 8985 and the related Forms 8986 must also be timely submitted electronically to the IRS through the BBA Portal (OFSS).

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7.  OFSS Status

NOTE: The PBBA OFSS PORTAL will be unavailable due to scheduled maintenance from:

• Tuesday, August 25, 2026, at 9:30 am ET until Thursday, August 27, 2026, at 8:00 pm ET, and
• Tuesday, September 22, 2026, at 5:00 pm. ET until Thursday, September 24, 2026, at 8:00 pm ET.

Please plan accordingly and do not attempt to access the PBBA OFSS portal during the maintenance period.

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