CCA 200948045: A trust listed as a partner makes the partnership subject to TEFRA

Plain-English summary

This Chief Counsel Advice addresses a partnership listed as a TEFRA partnership because a trust appeared as a partner on the partnership return. Counsel states that the partnership’s TEFRA status does not depend on the ultimate determination of the trust partner's status, and that a later closing agreement does not change that jurisdictional determination. The closing agreement makes the issue moot because the IRS can assess and collect from each partner under the respective agreement. Whether a power of attorney had authority to sign for a partner is a factual question, and its scope depends on the purpose for which it was given.

Ruling snapshot

• Question: Does a partnership remain subject to TEFRA when a trust is listed as a partner and the parties later sign closing agreements?
• Outcome: Advice given
• Key authorities: IRC §§ 6230(a)(2)(A)(ii), 6231(b)(1)(C), 6224(b), and 7121; Treas. Reg. § 301.6233-1(a); Durret v. Commissioner

Full text (IRS public release)

ID: CCA_2009101513304537 Number: 200948045
Release Date: 11/27/2009
Office: ----------
UILC: 6231.01-01

From: -------------------
Sent: Thursday, October 15, 2009 1:30:59 PM
To: ----------------
Cc: -----------------------------
Subject: RE: Client Question

The partnership is TEFRA regardless of the ultimate determination of the status of the trust partner if the trust is listed as a partner on the partnership return. See Treas. Reg. 301.6233-1(a) and 6231(g); Durret v. Commissioner (10th Cir)(TEFRA status is determined as of beginning of audit, not based on subsequent adjustments/determinations).

The closing agreement does not change this jurisdictional determination. It just renders it moot since we can assess and collect each partner based on each of their respective closing agreements regardless of the partnership's status. I.R.C. 7121, 6224(b); 6231(b)(1)(C) and 6230(a)(2)(A)(ii).

Whether the POA had authority to sign on behalf of a partner is a factual question. Our regulations just say that if the POA was given for other purposes, it won't be assumed to apply for TEFRA purposes as well unless the taxpayer sends a letter saying that it should be given that effect. If the POA was given in the context of a TEFRA proceeding for purposes of representing the partner in the TEFRA proceeding, then no special language is needed.

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