Disclosure of indirect partner keeps assessment period open

Plain-English summary

Chief Counsel addressed the assessment period for source-partnership income omitted from an indirect partner's return. If the IRS timely issued a final partnership administrative adjustment, IRC § 6229(e) kept the indirect partner's assessment period open until at least one year after the IRS received the partner's name, address, and profits interest. An amended return that supplied all of that information could start the one-year period. Income arising only from an upper-tier partnership remained subject to the normal assessment period. The IRS could nevertheless assert an offset without a time limit against a refund it was otherwise issuing.

Ruling snapshot

• Question: How long did the IRS have to assess an unidentified indirect partner after receiving identifying information on an amended return?
• Outcome: Advice given that the period remained open for at least one year after the information was supplied
• Key authorities: IRC §§ 6229(e) and 6501

Full text (IRS public release)

ID: CCA_2014111715035401 [Third Party Communication:

UILC: 6230.00-00 Date of Communication: Month DD, YYYY]

Number: 201502009
Release Date: 1/9/2015
From:
Sent: Monday, November 17, 2014 3:03:54 PM
To:
Cc:
Bcc:
Subject: RE: amended return statute question

Your facts are a little unclear.

It sounds like the source partnership income was not reported on the indirect partner’s
return.

If we issued a timely FPAA to the source partnership, under section 6229(e), the section
6501 statute for an unidentified indirect partner does not expire before one year after his
name, address and profits interest is provided to the Service with respect to the source
partnership. If all the forgoing information was provided in the 2013 return amended
return, that partner’s section 6501 statute would not expire at least for another year from
that date.

For additional income reported by a tier, we would only have the normal period to
assess income originating exclusively from that tier, but we have an unlimited time to
assert any offset to a refund we are otherwise issuing.