A partnership audit under the Bipartisan Budget Act (BBA) rules does not end with a single bill. It moves through a series of formal notices, and each one starts or stops a clock. Miss one of those clocks and you may lose the right to reduce the tax, shift it to the partners, or go to court.
The good news is that the sequence is set by statute. The IRS cannot skip steps without the partnership's agreement. Here is how it unfolds.
Who gets the notices
IRC 6231(a) requires the IRS to mail three notices to both the partnership and the partnership representative: a notice of any administrative proceeding, a notice of any proposed partnership adjustment, and a notice of any final partnership adjustment. A notice is sufficient if mailed to the last known address of the partnership representative or the partnership, even if the partnership has stopped existing.
If no partnership representative designation is in effect, Treas. Reg. 301.6231-1(d)(2) allows the IRS to mail the notice to "PARTNERSHIP REPRESENTATIVE" at the partnership's last known address. Under IRC 6223(b), the partnership and every partner are bound by the actions taken by the partnership in the proceeding. That is why the identity of the partnership representative matters before the first letter arrives.
Step 1: Initial contact and the notice of administrative proceeding (NAP)
IRM 4.31.9.8.1 says the examiner issues the NAP letters no earlier than 30 days after the initial contact letter, Letter 2205-D, and no later than the earlier of the opening conference or the date the books and records are first inspected. The NAP letters are Letter 5893 to the partnership and Letter 5893-A to the partnership representative, sent by certified mail in separate envelopes.
The NAP is the point of no return for self-correction:
- The partnership can no longer file an administrative adjustment request for that year under IRC 6227(c).
- Partners can no longer notify the IRS that they are reporting a partnership item inconsistently, under Treas. Reg. 301.6222-1(c)(5), except as allowed in the modification process.
IRM 4.31.9.8.1 also notes that each year under examination gets its own set of NAP letters. Each year stands on its own.
Step 2: The examination and the statute
During the exam, the controlling deadline is the period for making partnership adjustments under IRC 6235(a)(1), generally 3 years after the later of the filing date, the due date, or the date an AAR was filed. Examiners commonly ask the partnership representative to extend it on Form 872-M. IRM 4.31.9.8.4.2 directs the examiner to request an extension if that date will expire within 14 months, assuming the case is not a no-change. The full rules are in the BBA statute of limitations.
Step 3: The 30-day letter
If the examiner proposes adjustments and the partnership may want Appeals, IRM 4.31.9.10.2 describes a 30-day letter package: Letter 5891 with Form 14791, which shows the preliminary partnership examination changes and imputed underpayment computation. The partnership can protest unagreed adjustments, including the substantive issues, the imputed underpayment amount, and penalties. The IRM requires at least 18 months remaining on the IRC 6235(a)(1) date when the case reaches Technical Services for an Appeals case, so expect an extension request.
Step 4: The notice of proposed partnership adjustment (NOPPA)
The NOPPA is the formal proposal. Under IRM 4.31.9.10.3, the package includes Letter 5892 to the partnership, Letter 5892-A to the partnership representative, Form 14792 showing the changes and the imputed underpayment computation, and Form 886-A explanations.
IRC 6231(b)(1) and Treas. Reg. 301.6231-1(b)(1) say the NOPPA must be mailed before the IRC 6235(a)(1) period expires, including extensions. A NOPPA mailed late is untimely.
Step 5: The 270-day modification window
The NOPPA starts the most important clock in the case. IRC 6225(c)(7) gives the partnership 270 days from the date the NOPPA is mailed to submit everything needed to modify the imputed underpayment, unless the IRS consents to an extension. IRM 4.31.13.8 identifies Form 8984 as the extension request and Form 8980 as the modification request.
This is where partners can file amended returns, tax-exempt partners can be carved out, and lower rates can be applied. The details are in reducing the imputed underpayment through modifications.
The partnership can also cut the window short. Form 8981 waives the remaining period, and IRM 4.31.13.10.1 cautions that after it is countersigned, no additional modifications can be submitted.
When the IRS decides a modification request, IRM 4.31.13.8.2 says it issues Letter 5975 with Form 15027, and the partnership representative has 10 days from the letter's issuance date to respond. The representative may request an Appeals conference on the modification determination.
Step 6: The notice of final partnership adjustment (FPA)
IRC 6231(b)(2)(A) bars the IRS from mailing the FPA earlier than 270 days after the NOPPA unless the partnership waives that protection. The outer deadline comes from IRC 6235(a): the later of the (a)(1) date, 270 days after a completed modification submission, or 330 days after the NOPPA (plus any agreed extension of the modification window).
IRM 4.31.13.10 describes the FPA as Letter 5933, Letter 5933-A, Form 15027, and Form 886-A. The FPA tells the partnership the final adjustments, how to agree, and how to petition a court, and it informs the partnership it may elect the push-out alternative.
Step 7: After the FPA, two short clocks
45 days to push out
Under IRC 6226(a)(1), the partnership may elect, within 45 days after the date of the FPA, to have reviewed year partners take the adjustments into account instead of the partnership paying. IRM 4.31.13.11.1 says Form 8988 is the election. See the push-out election under Section 6226.
90 days to go to court
IRC 6234(a) allows the partnership to file a petition for readjustment within 90 days after the FPA is mailed, in the Tax Court, the federal district court for the partnership's principal place of business, or the Court of Federal Claims. For district court or the Court of Federal Claims, IRC 6234(b) requires a deposit of the imputed underpayment, penalties, and additional amounts as the FPA determines them.
Once a timely petition is filed, IRC 6231(c) prevents the IRS from mailing another FPA for that year, absent fraud, malfeasance, or misrepresentation of a material fact.
Step 8: Assessment and collection
IRC 6232(b) bars assessment of the imputed underpayment, and any levy or court collection proceeding, until the 90th day after the FPA is mailed and, if a petition is filed, until the court's decision is final.
After assessment, the IRS issues notice and demand. If the imputed underpayment is not paid within 10 days of that notice, IRC 6232(f) applies a higher interest rate and lets the IRS assess each partner of the adjustment year (or former partners, if the partnership no longer exists) for a proportionate share. That partner-level assessment must be made within 2 years after the notice and demand under IRC 6232(f)(6)(B).
The timeline at a glance
| Event | Key deadline or rule | Authority |
|---|---|---|
| Initial contact letter (Letter 2205-D) | NAP no earlier than 30 days later | IRM 4.31.9.8.1 |
| NAP (Letters 5893, 5893-A) | No more AARs or inconsistent-treatment notices for the year | IRC 6227(c); Treas. Reg. 301.6222-1(c)(5) |
| NOPPA (Letters 5892, 5892-A) | Must be mailed within the IRC 6235(a)(1) period | IRC 6231(b)(1) |
| Modification request | 270 days from NOPPA, unless extended | IRC 6225(c)(7) |
| FPA (Letters 5933, 5933-A) | Not earlier than 270 days after NOPPA unless waived | IRC 6231(b)(2)(A) |
| Push-out election | 45 days after the FPA | IRC 6226(a)(1) |
| Court petition | 90 days after the FPA is mailed | IRC 6234(a) |
| Partner assessment for unpaid imputed underpayment | Within 2 years after notice and demand | IRC 6232(f)(6)(B) |
What to do with each notice
Calendar every date the day the letter arrives. Confirm who the partnership representative is and that the person is actually engaged. Start gathering partner information the moment a NOPPA appears, because amended return modifications take time and require partners to pay. And never sign a waiver or extension without knowing exactly which clock it changes.
For a broader look at IRS examinations of business entities, see IRS audit help. If your partnership has received a BBA notice, the Law Offices of Darrin T. Mish, P.A. in Tampa, Florida can review where you are in the sequence and what options remain. Call 813-229-7100.
Every BBA notice is polite. Every one of them also has a deadline you cannot get back.
Frequently asked questions
What is a NAP in a BBA partnership audit?
A NAP is the notice of administrative proceeding the IRS must mail under IRC 6231(a)(1) to both the partnership and its partnership representative when it begins a partnership-level examination. IRM 4.31.9.8.1 identifies the letters as Letter 5893 and Letter 5893-A. Once it is mailed, the partnership cannot file an administrative adjustment request for that year, and partners cannot newly report items inconsistently.
How long does a partnership have to request modification after a NOPPA?
IRC 6225(c)(7) gives the partnership 270 days from the date the NOPPA is mailed to submit everything required for a modification, unless the IRS consents to extend the period. IRM 4.31.13.8 identifies Form 8984 as the extension request. If the partnership signs a Form 8981 waiver, the window closes early and no further modifications can be submitted.
Can the IRS issue the FPA right after the NOPPA?
Not without the partnership's agreement. IRC 6231(b)(2)(A) bars the IRS from mailing the notice of final partnership adjustment earlier than 270 days after the NOPPA is mailed, unless the partnership elects to waive that protection. The waiver is made on Form 8981 under IRM 4.31.13.10.
What deadlines start when the FPA is mailed?
Two short ones. The partnership has 45 days after the date of the FPA to elect the push-out alternative under IRC 6226(a)(1), using Form 8988. It has 90 days after the FPA is mailed to file a petition for readjustment under IRC 6234(a) in the Tax Court, a federal district court, or the Court of Federal Claims. Court options other than the Tax Court require a deposit.
This guide is general information about federal tax law, not legal advice for your situation. Reading it does not create an attorney-client relationship.