Sec. 3. (a) If the department conducts an audit or investigation of a partnership, and the department determines that the partnership:
(1) did not correctly report any tax attribute for a taxable year; or
(2) did not correctly allocate any tax attribute for a taxable year;
the department may adjust or reallocate the tax attribute. If the department makes an adjustment or reallocation to one (1) or more tax attributes, the department shall provide a report of partnership adjustments for the taxable year to the partnership.
(b) The preliminary report of partnership adjustments shall list:
(1) the department's adjustments to tax attributes; and
(2) the allocation of the department's adjustments to all affected direct partners.
(c) If the preliminary report of partnership adjustments for a taxable year results in either:
(1) a potential increase in tax to one (1) or more direct partners; or
(2) if the partnership reported tax attributes that would result in a refund of tax to one (1) or more partners, a reduction in that refund;
such report shall be treated as a proposed assessment under IC 6-8.1-5 to the partnership.
(d) If the result for partnership adjustments for a taxable year results in:
(1) no direct increase in tax to any direct partner; and
(2) a change in tax attributes to one (1) or more direct partners that would result in a refund in excess of any refund claimed;
the department shall issue a report of proposed partnership adjustments to the partnership reflecting such adjustments. Any refund arising from a report of proposed partnership adjustments shall be issued to the partners, subject to the partner claiming the refund and any statute of limitations on such refunds. In the case of partnership adjustments otherwise described in this subsection that result from a partnership adjustment described in subsection (c), all such partnership adjustments shall be treated as adjustments to which subsection (c) applies.
As added by P.L.159-2021, SEC.18.