CCA 201328033: When an examination notice may be issued to partnership partners

Plain-English summary

Chief Counsel advice addresses two separate questions about a notice of beginning of administrative proceeding, or NBAP, and a partnership examination. The advice states that the statutory requirement for an NBAP is that it be issued to partners at least 120 days before the final partnership administrative adjustment is issued to the tax matters partner. Issuing the NBAP does not have to coincide with the start of an examination, although it triggers notice obligations for the tax matters partner. Separately, the one-examination rule for a taxpayer’s books and records is a facts-and-circumstances inquiry under IRC § 7605(b).

Ruling snapshot

• Question: Must an NBAP be issued only when an examination of partnership books and records begins?
• Outcome: Advice given.
• Key authorities: IRC §§ 6223, 7605; Treas. Reg. §§ 301.6223(a)-2(a), 301.6223(g)-1.

Full text (IRS public release)

ID: CCA_2013062816210101 Third Party Communication: None

UILC: 6223.00-00
Date of Communication: Not Applicable

Number: 201328033
Release Date: 7/12/2013
From:
Sent: Friday, June 28, 2013 4:21:02 PM
To:
Cc:
Bcc:
Subject: RE: What Constitutes an Examination?

There are really two separate issues:

(1) the only statutory requirement for the issuance of an NBAP is that it be issued to the partners at least 120 days before issuance of the FPAA to the TMP. I.R.C. 6223(d)(1). There is no statutory or regulatory requirement that ties the issuance of this notice to the actual beginning of an examination of the partnership books and records. But the issuance of the NBAP does trigger an obligation on the part of the TMP to notify other partners of an examination. See Treas. Reg. 301.6223(g)-1 and 301.6223(a)-2(a).

(2) Section 7605(b) on the other hand requires that there shall be only one examination of a taxpayer’s books and records unless the taxpayer requests or the Service, after investigation, gives the taxpayer notice that a second examination is required. When an examination of books and records begins is a facts and circumstances inquiry.