CCA 201107023: Collection failure is not a TEFRA settlement agreement

Plain-English summary

Chief Counsel advised that failing to collect from a partner does not create the type of settlement agreement that gives other partners a right to seek a consistent agreement under IRC § 6224(c). A settlement agreement for this purpose requires mutual written assent about the treatment of partnership items. The advice also states that partners whose partnership items have already been settled or converted to nonpartnership items are not eligible to request consistent agreements under Treas. Reg. § 301.6224(c)-3(b)(ii).

Ruling snapshot

• Question: Does an inability to collect from a partner create a TEFRA settlement agreement that allows other partners to request consistent agreements?
• Outcome: Advice given.
• Key authorities: IRC § 6224(c); Treas. Reg. § 301.6224(c)-3(b)(ii).

Full text (IRS public release)

ID: CCA_2011012113545037 Number: 201107023
Release Date: 2/18/2011
Office: ----------
UILC: 6224.01-04

From: -------------------
Sent: Friday, January 21, 2011 1:54:54 PM
To: -------------
Cc: ----------------------------------
Subject: RE: TEFRA - Consistent Settlement Agreements

Failing to ultimately collect against a partner is not a "settlement agreement" under section 6224(c)(1) which invokes the rights of other partners to seek a "consistent agreement"under section 6224(c)(2). A "settlement agreement" for this purpose is a mutual assent in writing as to the treatment of partnership items. Furthermore, if other partners have previously settled or otherwise had their partnership items convert to nonpartnershp items, they not eligible to request consistent agreements under Treas. Reg. 301.6224(c)-3(b)(ii).