(c)

1. (1) A unified audit procedure shall begin when the commissioner so notifies the tax matters partner. Except as otherwise provided, the commissioner shall begin a unified audit procedure and issue a notice of determination of pass-through entity items within 3 years after the later of the date on which the entity's return for the taxable year was either filed or required to be filed, taking extensions into account. The 3-year period shall be extended to the extent the statute of limitations for audit or assessment is extended under subsection (d). It shall be the responsibility of the tax matters partner to provide notice to members and indirect owners of the pendency of the unified audit procedure. Such notice shall be provided in the manner and to the extent required in the partnership or other agreement governing the pass-through entity and its members and indirect owners. The failure of the tax matters partner to provide notice shall not affect the validity of the unified audit procedure with respect to all members and indirect owners participating in the unified audit procedure. The determination of pass-through entity items after the commencement of a unified audit procedure shall be made exclusively under the unified audit process which, except as specified in this section, shall supersede the assessment and abatement process otherwise applicable under this chapter to members and indirect owners with respect to pass-through entity items. If, in the course of a unified audit procedure, it appears to the commissioner that the statement of pass-through entity items on the entity's return will result in a tax liability of members and indirect owners that is different from the correct amount, the commissioner shall give notice of proposed adjustments to the tax matters partner and other members specified in regulations issued by the commissioner. Within 30 days after the notice, the tax matters partner or other members specified in regulations issued by the commissioner may request a conference with regard to proposed adjustments of pass-through entity items. After unified audit administrative proceedings are concluded, the commissioner shall issue a notice of determination of pass-through entity items to the tax matters partner. The tax matters partner or other members specified in regulations issued by the commissioner may petition the appellate tax board for review of the determination of pass-through entity items within 60 days after the determination has been sent to the tax matters partner. The appellate tax board shall have jurisdiction to decide petitions under this section and its decision shall be a final decision of the board for the purpose of the right to a judicial appeal.

2. (2) If no petition is filed with the appellate tax board as provided in this subsection, the determination of pass-through entity items shall become a final determination the day after the last date on which the pass-through entity may appeal the determination of pass-through entity items. If a timely petition is filed with the appellate tax board, the determination of pass-through entity items shall become a final determination on the later of:

   1. (i) the date of the appellate tax board decision or subsequent final judicial decision; or (ii) the day after the date on which the right to any further appeal expires. After a final determination of pass-through entity items is made, the commissioner shall assess or abate members and indirect owners in accordance with the final determination. The commissioner shall not be required to issue a notice of intent to assess prior to assessment.

   2. (d)

      1. (1) Except as provided in this subsection, the statute of limitations for the assessment of tax of a member or indirect owner with respect to a pass-through entity item or an item affected by a pass-through entity item for a taxable year to which pass-through entity items relate shall not expire before the later of:

         1. (i) the assessment period, including subsections (d) or (h) of section 26, applicable to the taxpayer member or indirect owner for tax periods to which pass-through entity items relate; or (ii) 1 year after the date the determination of pass-through entity items becomes a final determination under paragraph (2) of subsection (c).
      2. (2) Subsections (d) and (h) of section 26 shall apply to returns filed by a pass-through entity. In such cases, the commissioner may conduct a unified audit of pass-through entity items and reach final determination of those items during such extended time periods as are consistent with those described in said subsections (d) and (h) of said section 26.
      3. (3) The tax matters partner or other person authorized by a pass-through entity may enter into a written agreement with the commissioner following the procedures under section 27 to extend the statute of limitations for the conduct of a unified audit procedure and determination of pass-through entity items.
      4. (4) A member or indirect owner participating in the unified audit procedure may, within 6 months after an assessment or abatement made after a final determination of pass-through entity items in accordance with paragraph (2) of subsection (d), challenge the computation of tax as it applies to that taxpayer by filing an application for abatement under section 37; provided, however, that the application shall be limited to computational matters on the member's or indirect owner's return attributable to pass-through entity items and shall not contest the underlying determination of the pass-through entity items.
      5. (e) Members or indirect owners of a pass-through entity may elect not to participate in a unified audit procedure by providing notice to the commissioner in such time and manner as the commissioner may require. Members or indirect owners who elect not to participate in the unified audit procedure shall follow the procedures under section 26 for pre-assessment conferences and procedures under section 37 for abatement requests and appeals with respect to determining and disputing tax related to pass-through entity items; provided, however, that the statute of limitations for assessment of tax to members or indirect owners who have elected not to participate in the unified audit procedure with respect to pass-through entity items and affected items derived from a pass-through entity that is subject to a unified audit procedure shall not expire in any event sooner than the end of 1 year after the date the determination of pass-through entity items becomes a final determination under paragraph (2) of subsection (c).