CCA 200907029: An invalid partnership return left the limitations period open

Plain-English summary

Chief Counsel advised that a general Form 872 does not extend the assessment period for partnership items or affected items unless it specifically references tax attributable to partnership items. The appropriate forms would be Form 872-P for the partnership or Form 872-i for an individual partner. A partnership return also must be signed by a partner, which for an LLC means a member. Because an owner of a trust partner lacked authority to sign for the trust, only its trustee could do so, no valid partnership return had been filed and the section 6229 limitations period had not begun.

Ruling snapshot

• Question: Did the consent form extend the partnership-item assessment period, and had that period begun after an unauthorized signer filed the return?
• Outcome: Advice given: the general consent was insufficient, and the period had not begun because no valid partnership return was filed.
• Key authorities: IRC §§ 761(b), 6063, and 6229(b)(3).

Full text (IRS public release)

ID: CCA-818162-08 Number: 200907029
Release Date: 2/13/2009
Office: --------------
UILC: 6229.02-00

From: -------------------
Sent: Monday, August 18, 2008 4:29 PM
To: ----------------------

Cc: ---------------------------------------------------------------------------------------------------------------------------
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Subject: RE: Notice 2004-8 and LLCs

Your bigger problem is that a Form 872 does not extend the period for assessing partnership items or affected items. See I.R.C. 6229(b)(3) (Form 872 must specifically reference tax attributable to partnership items). A Form 872-P (or a Form 872-i for an individual partner) is used to extend the period for assessing partnership items and affected items arising from a TEFRFA partnership.

The good news is that a partnership return must be signed by a "partner". I.R.C. 6063. For these purposes that would be a "member" of the LLC. See I.R.C. 761(b). The owner of the trust partner had no authority to sign on behalf of the trust since only a trustee of the trust would have such power. Since no valid partnership return was filed, the statute of limitations under section 6229 has not yet begun to run.