Partnership rule extends but does not shorten assessment period

Plain-English summary

Chief Counsel explained that former IRC § 6229(a) supplied a minimum assessment period for tax attributable to partnership and affected items. It could extend a partner's otherwise applicable IRC § 6501 period but could not shorten it. In the matter discussed, only the second partnership return started the minimum three-year period because it was the only return covering the actual relevant period. The advice also stated that an incorrect return starts the assessment period only if it covers the entire taxable period.

Ruling snapshot

• Question: How does former IRC § 6229 affect the partners' assessment periods when multiple partnership returns were filed?
• Outcome: Advice given, only the return covering the relevant period starts the minimum three-year period
• Key authorities: IRC §§ 6229(a) and 6501; Germantown Trust v. Commissioner

Full text (IRS public release)

ID: CCA_2014090815143801
[Third Party Communication:

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

Number: 201439002
Release Date: 9/26/2014
From:
Sent: Monday, September 08, 2014 3:14:38 PM
To:
Cc:
Bcc:
Subject: RE: TEFRA Issue

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 a partnership taxable year was filed, or the last day for filing the return for that year (determined without regard to extensions). 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.

The filing of the partnership return in this case for the period ending 12/31merely means that no partner’s section 6501 period expired for items for the partnership’s taxable year expired before 3 years after the filing of the partnership return for the partnership’s taxable year. It was only the second return that started the minimum 3 year period since that was the only return that covered the actual relevant period.

Under Germantown Trust v. Commissioner (S.Ct case) only an incorrect return that covers the entire taxable period will start the period for assessment for that period.