IRS advised on TEFRA consents for a subsidiary partner that is not the tax matters partner

Plain-English summary

The IRS advised that both a consolidated group’s common parent and a subsidiary that is a partner in a TEFRA partnership should execute the partner-level consent when the subsidiary is not the tax matters partner. It provided a sample caption, explanatory language for Form 872, and signature blocks for the parent and subsidiary.

Ruling snapshot

• Question: Which entities should sign a TEFRA partner-level consent when a subsidiary is a partner but not the tax matters partner?
• Outcome: Advice given
• Key authorities: IRC §§ 1502 and 6501; Forms 872, 872-I, and 872-IA.

Full text (IRS public release)

ID: CCA-423001-10 Number: 201025070
Release Date: 6/25/2010
Office: --------------
UILC: 1502.77-00, 6501.04-05, 6501.08- 00

From: ------------------------
Sent: April 16, 2010 4:13 pm
To: -----------------
Cc: --------------------------------------------
Subject: Response to your inquiry

Here is a generic write up that covers your situation.

TEFRA (Forms 872, 872-I and 872-IA) – Subsidiary is Partner, but not TMP The common parent for the year of the flow through and the subsidiary partner both should execute the partner-level consent.
Example – S-1 is a member of the P and Subsidiaries Consolidated group and a partner in the ABC Partnership (a TEFRA partnership). The Service seeks to extend the group’s consolidated taxable Year 1, which corresponds to the year of the ABC Partnership flow-through. P is the common parent of the P and Subsidiaries Consolidated group in Year 1. P will execute, and S-1 should execute, the consent extending the P and Subsidiaries consolidated taxable Year 1 with regard to the ABC Partnership flow-through items.

CONSENT CAPTION: the consent caption should read: P (EIN: XX-XXXXXX) and Subsidiaries Consolidated group; S-1, partner in the ABC Partnership. Place an asterisk after “group”. At the bottom of the Form 872, indicate: this is with respect to the consolidated tax of the P and Subsidiaries consolidated group.

SIGNATURE BLOCK:

Parent’s:
[name of parent corporation] by [name of authorized representative, official title in parent corporation], on behalf of the members of the [name of consolidated group], including [name of subsidiary corporation], Partner of [name of TEFRA entity].

Sub’s:
[name of subsidiary corporation] by [name of authorized representative, official title in subsidiary corporation], Partner of [name of TEFRA entity].