CCA 200851084: Assessment of partners depends on a defaulted FPAA

Plain-English summary

The writer questions whether the IRS issued a final S corporation administrative adjustment, noting that TEFRA procedures for S corporations were repealed in 1996. The assessment answer is conditional: if the IRS issued an FPAA to the partnership's partners and it defaulted, the IRS may assess direct and indirect partners under section 6231(a)(6). The writer also says Form 872-i keeps the assessment period open but does not prevent an otherwise valid assessment. The email does not establish which notice was actually issued.

Ruling snapshot

• Question: Can the IRS assess direct and indirect partners, and does Form 872-i prevent an assessment?
• Outcome: Advice given. Assessment is proper if an FPAA was issued to the partners and defaulted. Form 872-i does not prevent an otherwise valid assessment. The writer questions whether an FSAA was issued.
• Key authorities: IRC section 6231(a)(6), last sentence; Form 872-i.

Full text (IRS public release)

ID: CCA-990853-08 Number: 200851084
Office: -------------- Release Date: 12/19/2008

UILC: 6231.06-00, 6229.02-00

From: -------------------
Sent: Tue 9/9/2008 8:53 AM
To: -----------
Cc: ---------------------------------------------------------------------------------------------------------------------------
-------------------------
Subject: RE: TEFRA statute

Are you sure we issued an FSAA? TEFRA procedures for S corporations were repealed in 1996.

If we issued an FPAA to the partners of ------------ partnership, which defaulted, we can properly assess
direct and indirect partners. See I.R.C. 6231(a)(6)(last sentence). The Form 872-i keeps the statute
open for assessment but does not prevent us from making an assessment that is otherwise valid.