CCA 200922050: TEFRA pass-through settlements used Delegation Order 4-19

Plain-English summary

Chief Counsel advised that Delegation Order 4-19 governed closing agreements settling TEFRA partnership items. The email described court treatment of section 6224(c) as part of the section 7121 closing-agreement framework for those items. It also identified the last sentence of section 6224(c)(1) as the rule making a pass-through entity's settlement binding on its indirect partners. The office therefore directed use of Delegation Order 4-19 for the contemplated partnership-item settlement.

Ruling snapshot

• Question: Which delegation governed a pass-through partner's settlement of TEFRA partnership items?
• Outcome: Advice given: use Delegation Order 4-19; section 6224(c)(1) binds indirect partners to the pass-through entity's settlement.
• Key authorities: IRC §§ 6224(c), 7121; Delegation Order 4-19.

Full text (IRS public release)

ID: CCA_2009042715311737 Number: 200922050
Release Date: 5/29/2009
Office: ----------
UILC: 6224.01-01

From: -------------------
Sent: Monday, April 27, 2009 3:31:19 PM
To: --------------------
Cc: -----------
Subject: RE: Procedures For Cases Where Pass-through Partner Wants to Agree and Pay

Del Order 4-19 covers closing agreements for TEFRA partnership items. The courts that have addressed the issue have concluded that section 6224(c) is just a subsection of section 7121 which governs closing agreements that relate to TEFRA partnership items. Furthermore, it is the last sentence of section 6224(c)(1) which makes settlement agreements by pass-though entities binding on the indirect partners. Del Order 4-19 governs settlement of TEFRA partnership items under section 6224(c), so that is the delegation order that should be used for such settlements.