IRS advised on TEFRA procedures for a return showing one partner

Plain-English summary

The IRS advised that both TEFRA and non-TEFRA procedures should be followed when an adjustment exists. It stated that TEFRA does not apply when a return showing only one partner is not a partnership return within the meaning of IRC § 6233. The IRS said the return's contents, rather than its label alone, determine its characterization. It also noted that certain tax-exempt entities may use a partnership return form for an election without filing a partnership return for purposes of IRC § 6233.

Ruling snapshot

• Question: Does TEFRA apply to a return showing only one partner?
• Outcome: Advice given
• Key authorities: IRC § 6233; Treas. Reg. § 1.6031(a)(1)-1(a)(5).

Full text (IRS public release)

ID: CCA_2010052713425537 Number: 201025064
Release Date: 6/25/2010
Office: ----------
UILC: 6233.00-00

From: --------------------
Sent: Thursday, May 27, 2010 1:42:56 PM
To: --------------------
Cc: ------------
Subject: RE: TEFRA Procedural Issue

If you have an adjustment, you should follow both TEFRA and non-TEFRA procedures. If there is no adjustment, it doesn't matter. Our primary position would be that TEFRA does not apply because a return showing only one partner does not constitute a "partnership return" within the meaning of section 6233. In other words, the characterization of a return under section 6233 should be governed by its contents, not just its label. For instance, certain tax exempt entities are required to use a partnership return which disavows that they are filing as a partnership. See also Treas. Reg. 1.6031(a)(1)-1(a)(5)(Form 1065 filed for purposes of certain elections is not treated as a partnership return for purposes of section 6233).