CCA 200917040: Partnership or foreign partner could seek adjustment after a substitute return

Plain-English summary

The IRS considered what could happen after it prepared a substitute return for a partnership's withholding tax on foreign persons. The advice said the substitute return would be legally sufficient under section 6020(b). The partnership or foreign partner could file an administrative adjustment request within three years under section 6227. A foreign partner who had not filed could report the amounts on the first return for that year, while one who had filed could leave inconsistent amounts for IRS assessment under section 6222 or request a change under section 6227(d).

Ruling snapshot

• Question: How could a partnership or foreign partner address amounts after the IRS prepared a substitute withholding return?
• Outcome: Advice given: an administrative adjustment request was available, with additional reporting options for the foreign partner.
• Key authorities: IRC §§ 6020(b), 6222, 6227.

Full text (IRS public release)

ID: CCA_2009032510480437 Number: 200917040
Release Date: 4/24/2009
Office: --------------
UILC: 6020.02-00, 6227.00-00

From: -------------------
Sent: Wednesday, March 25, 2009 10:48:07 AM
To: -------------------------------------------
Cc: ---------------------------------------------------------------------------------------------------------------------------
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Subject: RE: ---------

If we make a substitute withholding return under section 6020(b) for partnership withholding of taxes on foreign persons, it is "good and sufficient for all legal purposes." Id. Subsequent to our making such a return, either the partnership or the foreign partner can file an AAR within 3 years under section 6227 requesting adjustment to the amounts reported on the substitute return.

If the foreign partner has not filed a U.S. return, he could just include the amounts on his first return filed for that tax year. If he has previously filed a U.S. tax return for that tax year, he could do nothing since section 6222 would allow us to assess any inconsistently reported amounts, or he could file an AAR under section 6227(d) to request a change to his original reporting.