Section 6229 extends, but does not shorten, a partner's assessment period

Plain-English summary

Chief Counsel explained the relationship between the general tax-assessment period in IRC § 6501 and the TEFRA partnership rule in former § 6229. A partner's § 6501 period runs from the filing of the partner's actual tax return, not the partnership's information return. Section 6229 can extend that period for tax attributable to partnership and affected items, but it cannot shorten an otherwise open § 6501 period. Accordingly, if any partner's § 6501 period remains open for partnership items, the IRS may issue a final partnership administrative adjustment that binds that partner.

Ruling snapshot

• Question: Does former IRC § 6229 create a separate limitations period, or only extend a partner's general § 6501 assessment period?
• Outcome: Advice given. Section 6229 only extends the partner's § 6501 period, so an FPAA may bind a partner whose § 6501 period remains open.
• Key authorities: IRC §§ 6226(d)(1)(A), 6229, and 6501(a), (n); Bufferd v. Commissioner, 506 U.S. 523 (1993)

Full text (IRS public release)

ID: CCA_2014050511580301 [Third Party Communication:

UILC: 6229.00-00
Date of Communication: Month DD, YYYY]

Number: 201420018
Release Date: 5/16/2014
From:
Sent: Monday, May 05, 2014 11:58:03 AM
To:
Cc:
Bcc:
Subject: FW: TEFRA SOL question (interplay of 6501 & 6229)

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. As interpreted by the courts, 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). Blak Investments v. Commissioner, 133 T.C. 431, 437-38 (2009)