CCA 200910050: Settled partners were outside the remaining TEFRA proceeding

Plain-English summary

Fully executed Forms 870-PT converted the settling partners' partnership items and removed those partners from the TEFRA proceeding. Because a settled partner would not be subject to a final partnership administrative adjustment, the IRS had no reason to send one. If the IRS did not issue a refund, the partner had two years from the IRS's countersignature of the settlement to file a refund claim. A timely claim further extended the refund period under section 6230(d)(3) during the section 6532 period for filing suit.

Ruling snapshot

• Question: Should settled partners receive a final partnership adjustment, and when could they claim refunds?
• Outcome: Advice given: no adjustment should be sent, and the refund-claim period ran for two years from the IRS's countersignature.
• Key authorities: IRC §§ 6230(c), 6230(d)(3), 6231(b)(1)(C), and 6532.

Full text (IRS public release)

ID: CCA_2009012108300837 Number: 200910050
Release Date: 3/6/2009
Office: -------------
UILC: 6230.03-01

From: --------------------
Sent: Wednesday, January 21, 2009 8:30:12 AM
To: ---------------------
Cc: ------------
Subject: RE: Closing AAR w/ NBAPs issued

The Form 870-PT's converted the settling partners partnership items and removed them from the TEFRA proceedings. I.R.C. 6231(b)(1)(C). Any partner who has a fully executed Form 870-PT would not be subject to an FPAA, so there is no point in sending one to any settled partner. The settled partner would have two years from the date we cosigned his settlement to file a refund claim under section 6230(c)(1)(B) and and (c)(2)(B)(i) if we don't issue him a refund within this two year time period. If they timely file refund claims, the period for issuing refunds would be further extended under section 6230(d)(3) for the period under section 6532 during which they can file suit.