Partnership AAR reset the interest-suspension waiting period

Plain-English summary

Chief Counsel advised that a partnership administrative adjustment request increasing taxable income was a signed document showing additional tax due for § 6404(g). The AAR on Form 1065X was treated as an amended return under the regulations. As a result, the 36-month period before interest suspension began when the AAR was filed, and interest would be suspended only after that new period elapsed.

Ruling snapshot

• Question: When did the 36-month interest-suspension period begin after an AAR increased taxable income?
• Outcome: Advice given that the period began on the AAR's filing date
• Key authorities: IRC §§ 6227 and 6404(g)(1)(B); Treas. Reg. § 301.6404-4(a)(2), (a)(7)(ii); Form 1065X

Full text (IRS public release)

ID: CCA_2014040709121901 [Third Party Communication:

UILC: 6227.00-00, 6404.07-00
Date of Communication: Month DD, YYYY]

Number: 201418047
Release Date: 5/2/2014
From:
Sent: Monday, April 07, 2014 9:12:19 AM
To:
Cc:
Bcc:
Subject: RE: AAR-6404(g)

Section 6404(g)(1)(B) provides that, if the taxpayer provides a signed written document showing that the taxpayer owes additional tax, the 36 month period after which interest is suspended begins with the filing of that document. For these purposes, an AAR under section 6227 (Form 1065X) should be treated as a document showing that additional tax is owed if it results in an increase in taxable income. In this circumstance, it is treated as an amended return under Treas. Reg. 301.6404-4(a)(2) and - 4(a)(7)(ii). Consequently, interest will be suspended only after 36 months have passed from the filing of the AAR.