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 hedge funds, private equity 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, which featured Adrienne M. Baker, partner at Dechert, along with 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 from the range of options available to cure imputed underpayments unearthed in IRS partnership audits. For coverage of a previous Strafford program, see “What Fund Managers Should Consider When Negotiating SaaS Agreements” (Dec. 20, 2018).