Partnership assessment periods and FPAAs

Plain-English summary

The Chief Counsel advice states that the IRS may issue an FPAA if a partner's section 6501 assessment period remains open. If the period is open because of Form 872, the form must specifically reference partnership items as required by section 6229(b)(3). The advice explains that section 6229 extends, but does not shorten, each partner's section 6501 period. It concludes that an FPAA may bind a partner whose assessment period remains open for partnership items.

Ruling snapshot

• Question: When may the IRS issue an FPAA based on an open assessment period for partnership items?
• Outcome: Advice given
• Key authorities: IRC §§ 6501(a), 6501(n), 6229(a), 6229(b)(3), and 6226(d)(1)(A); Bufferd v. Commissioner, 506 U.S. 523, 527 (1993); 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)

Full text (IRS public release)

ID: CCA_2013082911411701 Third Party Communication: None

UILC: 6229.00-00 Date of Communication: Not Applicable

Number: 201402009
Release Date: 1/10/2014
From:
Sent: Thursday, August 29, 2013 11:41:18 AM
To:
Cc:
Bcc:
Subject: RE: Another grounds for disallowance on -------------------------

We can issue an FPAA if any partner’s section 6501 statute is open. If it is
open due to a Form 872, the Form 872 must specifically reference
partnership items as required by section 6229(b)(3). Since about 2008,
the standard Form 872 contains such language. This issue is addressed in
the attached Chief Counsel Notice on page 10.

In short, 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). This period runs from the filing
date of an actual tax return rather than from the filing date of a pass-
through entity information return [such as a partnership return]. 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. It
does not shorten the partners' otherwise applicable period for assessment.

So if any partner’s section 6501 period is open for partnership items, we
may issue an FPAA that is binding on that partner. I.R.C. 6226(d)(1)(A).