Form 7036, Elect BBA for Eligible Tax Years in 30 Days

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A partnership opens Letter 2205-D, sees that the audited year started before January 1, 2018, and has a decision to make before the date printed on that letter starts working against it. Form 7036 is the election that moves an Eligible Tax Year out of TEFRA and into the BBA centralized audit regime, and an Eligible Tax Year is one that began after November 2, 2015 and before that January 1, 2018 line.

The piece that catches people is the clock. The signed election has to reach the IRS contact named in the notice within 30 days of that first examination notice, not 30 days from when it reached the mailroom. The signer must be the Tax Matters Partner for that year or the person authorized to sign the Form 1065, and the statement has to include a specific representation that the partnership has, and reasonably anticipates having, sufficient assets to pay any imputed underpayment.

Key Takeaways

• Form 7036 is the election that moves an Eligible Tax Year from TEFRA to the BBA audit regime. An Eligible Tax Year begins after November 2, 2015 and before January 1, 2018.
• You must file the election in writing within 30 days of the IRS’s first notice selecting the return for examination, often Letter 2205-D. Submit it to the IRS contact named in the notice.
• The signer must be the Tax Matters Partner for that year or the individual authorized to sign the Form 1065 for that year. The signature itself is prima facie evidence of authority.
• The statement must include a specific representation that the partnership has, and reasonably anticipates having, sufficient assets to pay any imputed underpayment.
• When the election is valid and timely, the year is governed by BBA procedures, not TEFRA. Courts have rejected extra proof demands about assets when the regulation only requires the written representation.

What is Form 7036 and when do you use it

Form 7036 is the written election under BBA section 1101(g)(4) that lets a partnership opt into the BBA audit regime for a specific Eligible Tax Year that would otherwise sit in TEFRA. The regulation sets the time, form, and manner. In plain terms, you send a dated, signed statement with specific items of information and representations to the IRS contact named in the initial exam notice, and you do it within 30 days. If you hit those marks, the IRS must treat the year under BBA procedures.

Under the rule, an Eligible Tax Year is any partnership taxable year that begins after November 2, 2015 and before January 1, 2018, unless the year is excluded because an AAR or amended return was filed or deemed filed under the older framework. This special window is narrow, which is why teams often confirm dates twice before they draft the election.

BBA early opt-in is a procedure election, not a negotiation. If you satisfy the written, signed, and timing requirements, the election is effective and the exam runs under BBA, not TEFRA.

Quick context, TEFRA versus BBA

• TEFRA governed partnership exams for pre‑2018 years by default. BBA became the default for tax years beginning after December 31, 2017, with the early opt‑in path created by section 1101(g)(4).
• The early opt‑in exists so a 2016 or 2017 year under exam can be handled inside the centralized BBA framework, including the BBA’s NAP, NOPPA, and FPA sequence.

Why timing drives outcomes

Your 30‑day window opens when the IRS first notifies the partnership that the return is selected for examination. For partnerships, the IRS uses Letter 2205-D as that initial contact. File the election within 30 days of that date, not the date of a later request. When the IRS receives a valid election, it must wait at least 30 days before mailing the Notice of Administrative Proceeding, which gives you a short planning runway to finalize your BBA posture.

Missing the 30‑day window usually means you remain in TEFRA for that year. The regulation does not allow a general extension request for this election, so teams typically calendar multiple reminders the day the notice arrives.

What must be in your election

Your written statement needs to include the partnership’s identifying details, the year, language electing application of section 1101 of the BBA for that year, a proper designation of the partnership representative, and the required representations, including the assets representation. The statement must be dated and signed by the Tax Matters Partner for the examined year or by the person authorized to sign the return for that year.

Courts have reinforced that if you include the exact assets representation the regulation requires, and you file on time with an authorized signature, the election is valid. The IRS cannot add extra hurdles that are not in the regulation’s text, for example, demanding bank statements as a precondition to recognizing the election.

Timing, deadlines, and the real‑world sequence

Here is the typical sequence you should plan for when a pre‑2018 year is selected for exam.

• Day 0, initial IRS notice. The partnership receives Letter 2205-D, the notice of selection for examination. This starts the 30‑day clock for a Form 7036 election. Keep the envelope and letter, and scan both for your file.
• By Day 30, file the election. Deliver a dated, signed statement, with “Election under Section 1101(g)(4)” at the top, to the IRS contact named in Letter 2205-D. Use tracked delivery and keep proof of receipt.
• After receipt, short pause. The IRS must wait at least 30 days after receiving your election before issuing the Notice of Administrative Proceeding under BBA. Use this window to confirm your partnership representative designation and your response plan.
• BBA exam begins. Expect BBA notices in sequence, including the NAP, the NOPPA, and, if needed, the FPA. The IRS lists these steps on its BBA overview page.

Authorized signer, get this right

The regulation is clear, the signer must be the Tax Matters Partner for the examined year, or the person who had authority to sign the Form 1065 for that year. Keep in mind the TMP role only signs the election itself; under BBA the Partnership Representative designated in Part II takes over sole authority to bind the partnership for that year, replacing the TMP concept going forward. The signature itself is prima facie evidence of that authority, which helps avoid side disputes about who could sign. Document your signer’s authority under the partnership agreement and keep it in the workpapers.

Required representations, include every line

Your statement must include four certifications, that the partnership was notified of selection for examination by the IRS on the date stated in the notice, is not insolvent and does not reasonably anticipate becoming insolvent before resolution of any adjustment, is not currently and does not reasonably anticipate becoming subject to a bankruptcy petition (voluntary or involuntary) under Title 11 of the United States Code, and has, and reasonably anticipates having, sufficient assets to pay a potential imputed underpayment. Use the regulation’s language verbatim, since that is what courts looked to when they evaluated elections.

Eligible Tax Years, confirm the window and the exceptions

An Eligible Tax Year for this election begins after November 2, 2015 and before January 1, 2018. There are carve outs. If the TMP filed a TEFRA AAR for that year, or the year is deemed to have an AAR or amended return filed before January 1, 2018, then that year is not eligible. Confirm whether any AARs or amended returns exist or are deemed to exist before you draft the election.

Table, check your year and status fast

Item	TEFRA default year	Eligible for BBA early opt‑in with Form 7036	Notes
Year began 2014 or 2015 before Nov 3	Yes	No	Outside the window.
Year began after Nov 2, 2015 and before Jan 1, 2018	Yes	Yes	Eligible, unless AAR or amended return exception applies.
Year began on or after Jan 1, 2018	No, BBA default applies	Not needed	These years are already under BBA.

Filing steps, a practical checklist

• Capture the exact date on Letter 2205-D, start the 30‑day timer.
• Confirm the year sits in the eligible window and does not fall into an AAR or amended return exception.
• Identify your authorized signer, TMP or return signer for that year, and document authority.
• Draft the statement with the heading “Election under Section 1101(g)(4)” and include all required content, including partnership representative details.
• Include the assets representation exactly as written in the regulation.
• Send to the IRS contact named in Letter 2205-D (not to a standard IRS service center), use tracked delivery, and retain proof.
• Calendar 35 days after IRS receipt to watch for the BBA Notice of Administrative Proceeding.

Pro tip, if the IRS initially used the wrong 2205 letter for a partnership, field guidance instructs re‑issuance of Letter 2205-D with a new response period. Track this, since it can reset your planning timeline.

A simple “what to include” template

Below is a short, plain‑English scaffold you can adapt with your counsel. Use your letterhead, insert the bracketed items, and keep the regulation’s phrasing for the representations.

Election under Section 1101(g)(4) Partnership name, EIN, and tax year ended [mm/dd/yyyy]. We elect application of section 1101 of the BBA to the partnership return for the above Eligible Tax Year. Partnership representative, [name, TIN, address, phone], is designated for this year. Representations,

• The partnership is not insolvent and does not reasonably anticipate becoming insolvent before resolution of any adjustment.
• The partnership is not currently and does not reasonably anticipate becoming subject to a bankruptcy petition (voluntary or involuntary) under Title 11 of the United States Code.
• The partnership has sufficient assets, and reasonably anticipates having sufficient assets, to pay a potential imputed underpayment for the year. Authorized signature, dated, signed under penalties of perjury by the TMP or return signer for the examined year.

Common IRS challenges and how courts responded in 2024

You should expect questions about assets, signatures, and timing. The most important development here is the Tax Court’s 2024 opinion in SN Worthington Holdings LLC, which addressed these points directly.

• Assets representation. The IRS argued the taxpayer had to establish, not just represent, that it had sufficient assets to pay an imputed underpayment. The Tax Court disagreed. It held that a signed Form 7036, with the regulation’s representation, satisfied the requirement. The court treated the regulation’s text as controlling and refused extra requirements that do not appear in the rule.
• Wrong regime notices. Once a partnership validly elects into BBA, an FPAA issued under TEFRA is invalid because the court’s jurisdiction depends on a valid notice under the correct regime.
• Signature and timing disputes. The regulation treats the dated signature as prima facie authority, which limits after‑the‑fact arguments about signer power where the other elements are met. Courts also look to whether the government actually pressed a defect.
• Estoppel. The IRS has argued that a partnership should be estopped from invoking BBA if it stayed silent after a denial letter. The court in Worthington found the elements were not met where the dispute turned on law, and the IRS already had the facts.

If you are preparing an election today, these holdings matter in a practical way. Use the exact representation language, sign with an authorized person, file on time, and keep proof. That set of facts puts you in the strongest position if the IRS later challenges your election.

Where Letter 2205-D fits

Letter 2205-D is the initial exam contact for partnerships across regimes, TEFRA or BBA or non‑TEFRA. The IRS’s own BBA page and Internal Revenue Manual entries confirm that Letter 2205-D is the notice of selection for examination, which is what triggers your 30‑day window to file. Keep the letter and envelope, and document when you received it.

Documentation that supports your assets representation

You only need to make the representation in the statement to satisfy the regulation, however, many firms still assemble a light file so they are ready for questions later. Typical items include current balance sheets, cash forecasts, bank availability, partner capital statements, and any committed financing. If you create this file, date it and tie it to the represented year, then store it in your workpapers. The goal is simple, fast answers if an examiner asks. The regulation does not require pre‑approval or attachments for the election itself.

What-How-Wow, the essentials in one view

• What. Form 7036 is a short, time‑sensitive election that moves a pre‑2018 year into BBA. Use it only for years that began after November 2, 2015 and before January 1, 2018.
• How. File within 30 days of the first exam notice, usually Letter 2205-D, include the required details, designate the partnership representative, and sign with the TMP or return signer.
• Wow. In 2024, the Tax Court confirmed the IRS cannot add extra hurdles that are not in the regulation, and that a TEFRA FPAA is invalid if a valid BBA election exists. That clears a path for quicker, more predictable exams for the right years.

Sample workflow you can hand to your team

• Intake. Save the 2205-D, log the date, open a 30‑day timer, and spin up a short checklist.
• Eligibility check. Confirm the year falls within the window and is not excluded by AAR or amended return status.
• Authority. Identify the TMP or return signer for the examined year, confirm documentation, and prepare the signature page.
• Draft. Use the regulation’s wording for representations and include partnership representative details.
• Send. Deliver to the IRS contact named in the letter, track delivery, and keep proof of receipt.
• Monitor. Watch for the NAP after the required waiting period, then manage the exam under BBA.

If your internal reviewers are buried in production, consider separating the election tasking from workpaper prep so the 30‑day window does not slip. A controlled delivery partner can standardize the statement, the proof package, and the calendar, then route reviewers only the final sign‑ready version.

Quick pre‑filing checklist

• Verify the year is within the Eligible Tax Year window.
• Confirm there is no AAR or amended return that would knock the year out.
• Identify the TMP or return signer for that year and document authority.
• Draft the election with all required elements, including the partnership representative and four representations.
• File within 30 days of the Letter 2205-D date, and send to the IRS contact named in the notice.
• Track delivery, then watch for the NAP after the required waiting period.

When outside help makes sense

If your partners are stuck in review loops during peak season, time can slip on a 30‑day election. In those cases, a disciplined delivery partner can take the drafting, proof, and filing logistics off your plate, keep the file in your systems, and maintain your templates and controls. On complex engagements with multi‑state exposure or tiered structures, that kind of structure protects deadlines and documentation quality. If you need that kind of controlled capacity, Accountably can provide standardized workpapers, checklists, and routing while you retain authority, security, and review control. Use it when it helps you meet the deadline and keep quality high, not as a substitute for legal advice.

Conclusion

Form 7036 is short, but the stakes are real. The rule gives you a clear way to bring a pre‑2018 year into BBA, and courts have confirmed that the regulation’s plain text controls. Confirm eligibility, calendar the 30 days the moment Letter 2205-D lands, include the exact representations, and have the right person sign. File cleanly, keep proof, and prepare for a BBA exam, not TEFRA. If you want a second set of eyes on the election packet, loop in your counsel, and, if capacity is tight, get structured help on the assembly and tracking so nothing gets missed.

Common Mistakes We See Every Season

Most Form 7036 problems come from racing the 30-day clock without first clearing the eligibility gates. The patterns below repeat across exams and are all preventable with a short pre-drafting intake.

Reusable Checklists

These three lists are built to drop straight into a partnership-exam SOP and survive a partner handoff. Copy them into the workpaper, tick items as you go, and keep them with Letter 2205-D, the signed Form 7036, and the delivery proof.

Keep 7036 Season From Stalling

The 30-day window from Letter 2205-D is the only delivery deadline that matters on Form 7036, and it does not move. Per Section 1101(g)(4) of the Bipartisan Budget Act of 2015 and Treasury Decision 9780 (published August 5, 2016), the election is only available for partnership tax years that began after November 2, 2015 and before January 1, 2018, so when a Letter 2205-D lands on a pre-2018 year, the file has to move from intake to delivered election in under a month.

The fix is not a faster drafter. It is a pre-built intake routine that clears eligibility blockers, locks the signer, and assembles the packet on a fixed schedule so the 30-day clock stops being the constraint.

• Build a one-page intake sheet that captures the Letter 2205-D date, the exam year, the AAR and amended-return scan results, and the named IRS contact before any drafting begins.
• Pre-template Part I with the four certifications in the form's exact language so the only variable per engagement is the year under exam.
• Standardize Part II Partnership Representative onboarding as a named SOP that captures the IRC §6223 designation, TIN, and a written acceptance from the representative.
• Lock Part III signer authority against the prior-year Form 1065 signature page and the partnership agreement, not against the current managing partner by default.
• Route delivery to the specific IRS examiner named on Letter 2205-D per Temp. Reg. §301.9100-22T, by tracked carrier, with proof of receipt retained in the workpaper.

When capacity is the constraint and not the process, Accountably's U.S. tax delivery team can take drafting, eligibility scans, and packet assembly off the plate inside the same 30-day window, with signer authority, review control, and security retained on your side.

FAQs

Can we revoke a timely Form 7036 election

Revocation is possible only with IRS consent and within the timing limits in the regulation and related guidance. Treat the election as sticky, plan it with your exam approach in mind, and involve counsel before you file.

Does Form 7036 change partner‑level statutes

BBA centralizes adjustments at the partnership. Different timing rules can apply under BBA compared to TEFRA, including how and when adjustments flow and how notices are issued. Coordinate statute tracking with your exam team once the NAP arrives under BBA. Use the IRS BBA process overview as your roadmap.

What exactly triggers the 30‑day clock

The first written notice that the IRS selected the return for examination does, for partnerships this is Letter 2205-D. The 30 days run from the date printed on that notice, not from when the partnership receives it and not from a later information request.

Do we have to attach bank statements to prove assets with the election

No. The regulation requires a written representation, not attached proof. In 2024 the Tax Court held that the representation in a signed Form 7036 satisfies the requirement. Keep internal support in your file in case questions arise later.

What if the IRS sent the wrong initial letter

Field procedures instruct examiners to re‑issue Letter 2205-D for partnerships and allow additional time. If that happens, document both letters, and confirm your new dates.