Statute extension after a tax matters partner's bankruptcy

Plain-English summary

The Chief Counsel advice considers whether a statute extension was valid after the Tax Matters Partner entered bankruptcy. It states that the bankruptcy likely terminated the partner's status and authority to extend the statute under the cited regulations and section 6229(b)(1)(B). It notes an exception if the Tax Matters Partner did not notify the IRS of the bankruptcy, but explains that disclosure on Form 872-P could lead a court to find that notice was given.

Ruling snapshot

• Question: Was a statute extension valid after the Tax Matters Partner's bankruptcy terminated the partner's status?
• Outcome: Advice given
• Key authorities: IRC § 6229(b)(1)(B), (b)(2); Treas. Reg. §§ 301.6231(a)(7)-1(l)(iv), 301.6231(c)-7

Full text (IRS public release)

ID: CCA_2013120410413210
UILC: 6229.02-00

Number: 201402012
Release Date: 1/10/2014
From:
Sent: Wednesday, December 04, 2013 10:41:33 AM
To:
Cc:
Bcc:
Subject: RE: Statute Extension for TEFRA case

Hi ---------

As per our discussion, the following comes from one of our TEFRA folks, -------------. Please direct any
follow up questions to ----.

This would likely be an invalid statute extension since the bankruptcy of the TMP terminated his status as TMP under Treas. Reg. 301.6231(a)(7)-1(L)(iv) and Treas. Reg. 301.6231(c)-7 and, thus terminated his authority to extend the statute under section 6229(b)(1)(B).

Section 6229(b)(2) provides an exception if the TMP has not notified us of his bankruptcy in accordance with the regulations. But the fact that the bankruptcy is disclosed on the Form 872-P itself may lead a court to conclude that we have been notified.

Best,
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