Ezel / IRS Rulings / 201207008

CCA 201207008: Chief Counsel addressed partnership-level negligence penalties

Number
201207008
Outcome
Advice
Document type
Chief Counsel Advice
IRS subject
Tax Treatment Determined At Partnership Level; Accuracy-related penalty
Topics
Procedure, penalties, and administration
Code sections
§ 6221, § 6662, § 1446, § 1461
Ruling dated
January 25, 2012
Publicly released
February 17, 2012
Source
View Official PDF

Apply this to your situation

This page covers legal advice the IRS Office of Chief Counsel wrote for IRS staff, issued in 2012, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.

Currency note: this determination was released in 2012
Statutory amendments, regulation changes, court decisions, or later IRS guidance may have changed the analysis since then. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, threshold, or position mentioned here.
Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It is advice from the IRS Office of Chief Counsel to IRS personnel on the facts they presented, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.
About this page: The plain-English summary and ruling snapshot below were written by Ezel based on the official IRS release. The full text is the IRS's own document.
View official IRS release (PDF)

Plain-English summary

Chief Counsel advised that a partnership generally does not have an underpayment of tax for purposes of the negligence penalty because the partnership itself pays no income tax. In a TEFRA proceeding, the IRS instead determines penalties against the partners based on partnership-level facts, such as negligence by the partnership acting through its managers. The advice identified a limited exception for withholding taxes under IRC §§ 1446 and 1461, which can be an underpayment directly assessable against the partnership.

Ruling snapshot

  • Question: When may a negligence penalty be assessed directly against a partnership?
  • Outcome: advice
  • Key authorities: IRC §§ 6221, 6662(a), 1446, and 1461

Full text (IRS public release)

ID: CCA_2012012508350537 Number: 201207008
Release Date: 2/17/2012
Office: ---------
UILC: 6221.00-00, 6662.00-00

From: --------------------
Sent: Wednesday, January 25, 2012 8:35:18 AM
To: --------------------
Cc: ------------
Subject: RE: Partnership Penalties

Since the partnership pays no tax, there is typically no "underpayment of tax" by the partnership that could be subject to the negligence penalty. I.R.C. 6662(a). Instead, in a TEFRA proceeding we are determining penalties against the partners based on partnership-level determinations, e.g., the negligence of the partnership acting through its managers.

There is an underpayment of tax by the partnership, however, under sections1446 and 1461 for certain withholding taxes. That could be subject to a negligence penalty directly assessable against the partnership. Outside of this limited exception, I am not aware of other circumstances for assessing the negligence penalty against the partnership.

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