Audit results do not change whether TEFRA procedures apply

Plain-English summary

Chief Counsel advised that TEFRA partnership procedures would still likely govern the audit in question. Whether an audit is subject to TEFRA is determined at the beginning of the examination based on the partnership return. Later audit findings do not change that classification. The email relied on section 6231(g) and three cited judicial decisions.

Ruling snapshot

• Question: Can the results of a partnership audit change the initial determination that TEFRA procedures apply?
• Outcome: Advice given, TEFRA would still likely apply
• Key authorities: IRC § 6231(g); Harrell v. Commissioner; Nehrlich v. Commissioner; Doe v. Commissioner

Full text (IRS public release)

ID: CCA_2015012312283801 [Third Party Communication:

UILC: 6231.01-01
Date of Communication: Month DD, YYYY]

Number: 201510046
Release Date: 3/6/2015
From:
Sent: Friday, January 23, 2015 12:28:38 PM
To:
Cc:
Bcc:
Subject: RE: Guaranteed Payments

TEFRA would still likely apply. The TEFRA/non-TEFRA determination is made at the
beginning of the audit and does not change based on the audit results. I.R.C. 6231(g)
(reliance on partnership return to determine if TEFRA procedures apply); Harrell v.
Commissioner, 91 T.C. 242 (1988); Nehrlich v. Commissioner, 2009 WL 1284067 (9th
Cir. 2009); Doe v. Commissioner, 116 F.3d 1489 (10th Cir. 1997).