The IRS recently bolstered its workforce, budget and regulatory flexibility to perform audits of partnership vehicles, which will shine a brighter light on the tax practices of PE, hedge funds and other asset managers. Those reforms were due, in part, to changes to the IRS partnership audit rules introduced by the Bipartisan Budget Act of 2015 (BBA). Strafford CLE Webinars (Strafford) recently hosted a webinar examining the IRS partnership audit rules that featured Adrienne M. Baker, partner at Dechert; and Mary A. McNulty and Lee S. Meyercord, partners at Holland & Knight. This first article in a two-part series outlines the current status of IRS partnership audits; provides an overview of the BBA; explores provisions managers should consider including in fund documents; and examines pre-audit and audit processes. The second article will identify potential issues managers face when selecting between the range of options available to cure imputed underpayments unearthed in IRS partnership audits. For coverage of previous Strafford programs, see our two-part series: “Importance of Diligencing Transfer Restrictions in Secondaries to Avoid PTP, REIT and Other Negative Tax Issues” (Sep. 29, 2020); and “The Need to Parse Tax Elections, Allocate Taxes and Obtain Withholding Certificates Early in a Secondary Transaction” (Oct. 6, 2020).