AB 816

This bill makes various changes related to conducting tax audits of

pass-through entities such as partnerships, limited liability companies, and

tax-option corporations. Under the bill, the Department of Revenue may do all of

the following with regard to an audit of a pass-through entity:

1. Assess and collect additional tax from a pass-through entity on income

otherwise reportable by its pass-through members. Under the bill, a “pass-through

member” is, generally, a partner in a partnership, member of a limited liability

company, shareholder in a tax-option corporation, a beneficiary of an estate or a

trust, or any other person who derives a tax benefit from a pass-through entity.

2. Direct the secretary of the Department of Administration to refund to a

pass-through entity that part of an overpayment paid by the pass-through entity

and not by the entity's pass-through members.

3. Assess an adjustment to reduce a tax credit to a pass-through entity if the

pass-through entity previously computed the credit and reported the credit to its

pass-through members.

4. Assess an adjustment to increase a tax credit to offset additional tax assessed

to a pass-through entity.

5. Assess any pass-through member of a pass-through entity for additional tax

otherwise owed by one or more of the pass-through members.