CCA 200913059: An unfiled partnership withholding return left assessment open indefinitely

Plain-English summary

Chief Counsel addressed assessment periods for partnership withholding tax and the partnership's foreign partners. Withholding forms were tax returns of the state-law partnership itself. If the partnership failed to file the return, its section 6501 assessment period never began, leaving the IRS unlimited time to issue a final partnership administrative adjustment and assess foreign withholding. The foreign partners' separate assessments remained governed by their own section 6501 periods, as section 6229 might extend them.

Ruling snapshot

• Question: What limitations period applied when a partnership did not file its foreign-partner withholding tax return?
• Outcome: Advice given: assessment against the partnership remained open indefinitely, while each foreign partner had a separate limitations period.
• Key authorities: IRC §§ 1441 et seq., 6229, and 6501.

Full text (IRS public release)

ID: CCA_2009030311350837 Number: 200913059
Release Date: 3/27/2009
Office: --------------
UILC: 6501.00-00

From: -------------------
Sent: Tuesday, March 03, 2009 11:35:12 AM
To: -------------------
Cc: -----------
Subject: RE: Forms 1042 and 8804

The withholding forms are actual tax returns (e.g., for withholding tax for foreign partners under section 1441 et seq), and the assessment is against the state law partnership itself. So if the partnership fails to file the tax form, the period for assessing the entity itself under section 6501 never begins to run. We have an unlimited period to issue an FPAA and assess the partnership for foreign withholding. The period for separately assessing the foreign partners is subject to their own section 6501 periods as may be extended by section 6229.