CCA 201312038: agreements could extend the assessment period for partnership items

Plain-English summary

Chief Counsel explained how the assessment period for partnership items could be extended under the TEFRA partnership procedures. IRC § 6229 extended each partner's assessment period under § 6501, but did not create an independent assessment period. A partner could extend the period for that partner's partnership items by written agreement with the IRS. The IRS and the tax matters partner, or another person authorized by the partnership, could also agree in writing to extend the period for all partners. An agreement under § 6501(c)(4) applied to partnership items only if it expressly said so.

Ruling snapshot

• Question: How could the assessment period for partnership items be extended?
• Outcome: Advice given, the applicable period could be extended by written agreements meeting the statutory requirements.
• Key authorities: IRC §§ 6221 through 6234, 6229, and 6501; Treas. Reg. § 301.6229(b)-1(a)

Full text (IRS public release)

ID: CCA_2013010912475937 Number: 201312038
Release Date: 3/22/2013
Office: ----------
UILC: 6229.02-00

From: -------------------
Sent: Wednesday, January 09, 2013 12:48:05 PM
To: --------------------
Cc: ------------------------------
Subject: RE: TEFRA issues [POA of Second-Tier TEFRA Partnership Which is Investor of First-Tier Partnership; Form 872-P v. 872]

Please call me at --------------------.Here is some background for our discussion.

Sections 6221 through 6234 provide for unified partnership audit and litigation procedures (the TEFRA partnership procedures). Section 6501(a) provides the period of limitations for assessing any tax imposed by Title 26 of the United States Code, including tax attributable to partnership and affected items. See Bufferd v. Commissioner, 506 U.S. 523, 527 (1993). The Supreme Court in Bufferd explained that the pass-thru entity return does not start any period for assessment.1[1] Id. As referenced in section 6501(n), section 6229 merely extends each partner's section 6501 period. Section 6229(a) provides that each partner’s section 6501 assessment period for tax attributable to partnership and affected items shall not expire before the date that is three years after the later of the date on which the partnership return for the taxable year was filed, or the last day for filing the return for that year (determined without regard to extensions). Rhone-Poulenc Surfactants & Specialties, L.P. v. Commissioner, 114 T.C. 533, 542-43 (2000); Curr-Spec Partners, L.P. v. Commissioner, 579 F.3d 391, 396-97 (5th Cir. 2009); AD Global Fund, LLC v. United States, 481 F.3d 1351, 1354-55 (Fed. Cir. 2007); Andantech L.L.C. v. Commissioner, 331 F.3d 972, 976-77 (D.C. Cir. 2003). Thus, section 6229 operates only to extend a partner’s section 6501 period. Id.

The period of assessing partnership items for any one partner can be extended by that partner by entering into a written agreement with the IRS, or the period for assessing all partners can be extended by written agreement between the IRS and the TMP or any other person authorized by the partnership to enter into such an agreement. I.R.C. § 6229(b)(1); Treas. Reg. § 301.6229(b)-1(a). An extension under section 6501(c)(4) can only apply to partnership items if the agreement expressly provides that it applies to tax attributable to partnership items. I.R.C. § 6229(b)(3). Since 2007 the standard Form 872, paragraph (4), contains such language.

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1[1] Congress subsequently codified this holding in the last section of section 6501(a). 2

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