CCA 200851094: Stop at the first officer or manager who can sign for an entity tax matters partner

Plain-English summary

When a partnership's tax matters partner is itself an entity rather than an individual, someone has to put a pen to the consent extending the assessment period. This release answers how far up the ownership chain the Service has to look to find that person.

The answer is not far at all. An officer of the LLC serving as tax matters partner can sign under state law, and that is the end of the inquiry. The release puts the principle in one line: the Service is not looking for the ultimate taxpayer, it is looking for the first live person it can find who can sign under state law. As long as that person is an officer or manager under state law, they can sign, even if they are not a partner or a manager of the partnership itself.

The instruction corrects a misreading of the manual. The IRM provisions the recipient cited address a different configuration, where the officer authorized to sign sits in another entity, so that the chain has to be followed one more step and the officers of that entity consulted in turn. Those provisions describe what to do when the first entity has no one who can sign. They are not a general requirement to trace through every tier until a natural person who bears the tax is reached.

The distinction matters because partnership structures stack. A partnership's tax matters partner may be an LLC, whose members may be other entities, and tracing to the bottom of that structure could take several steps and considerable time, all while the assessment period runs. The rule stated here keeps the signature question separate from the liability question. Authority to sign is a matter of state law agency, and the first officer or manager with that authority has it regardless of who ultimately pays the tax.

One implication worth drawing out: the signer need not have any interest in the partnership. An officer of the entity tax matters partner may be an employee with no ownership stake anywhere in the structure, and the release says explicitly that this is fine. What matters is the officer's authority to act for the entity under state law, not their position in the partnership.

A companion release in this same batch, CCA 0851096, addresses the prior question of which members are even eligible to be designated tax matters partner of an LLC. Together they cover both halves of a consent's validity: whether the designation was good, and whether the right person signed.

This is a clean digital release rather than a scan, so no OCR correction was needed. The text as released has several dropped words, all kept: "the situation where the officer authorized to sign in another entity"; "Then you need to look to the officer that entity, etc."; and "he can sign even if he is not a partner of manager," where "of" stands where "or" is expected.

Ruling snapshot

• Question: Who may sign a consent extending the assessment period when the tax matters partner is an LLC rather than an individual?
• Outcome: Advice given. An officer of that LLC may sign if they have authority under state law. The Service looks for the first live person who can sign under state law rather than tracing through the structure to the ultimate taxpayer, and that person need not be a partner or a manager of the partnership. The IRM provisions cited address only the case where the authorized officer sits in a further entity.
• Key authorities: IRC section 6229(b) (extension by agreement); IRC section 6231(a)(7) (tax matters partner); state law authority of officers and managers; IRM provisions on signatories, cited but not identified in the release.

Full text (IRS public release)

ID: CCA-918134-08 Number: 200851094
Office: -------------- Release Date: 12/19/2008

UILC: 6229.02-00

From: -------------------
Sent: Thu 9/18/2008 1:46 PM
To: ------------------
Cc: ---------------------------------------------------------------------------------------------------------------------------
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Subject: RE: Signatory of Consent

An officer of the first LLC TMP can sign under state law. The IRM provisions you cite deal with the situation where the officer authorized to sign in another entity. Then you need to look to the officer that entity, etc. We are not looking for the ultimate taxpayer -- we are looking for the first live person we can find to sign under state law. As long as that person is an officer or manager under state law, he can sign even if he is not a partner of manager.