Ezel / IRS Rulings / 201722025

Nonmember cannot serve as an LLC partnership's tax matters partner

Number
201722025
Outcome
Advice
Document type
Chief Counsel Advice
IRS subject
Tax Matters Partner
Topics
Procedure, penalties, and administration
Code sections
§ 6231
Ruling dated
January 30, 2017
Publicly released
June 2, 2017
Source
View Official PDF

Apply this to your situation

This page covers legal advice the IRS Office of Chief Counsel wrote for IRS staff, issued in 2017, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.

Currency note: this determination was released in 2017
Statutory amendments, regulation changes, court decisions, or later IRS guidance may have changed the analysis since then. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, threshold, or position mentioned here.
Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It is advice from the IRS Office of Chief Counsel to IRS personnel on the facts they presented, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.
About this page: The plain-English summary and ruling snapshot below were written by Ezel based on the official IRS release. The full text is the IRS's own document.
View official IRS release (PDF)

Plain-English summary

Chief Counsel advised that a tax matters partner designation on a partnership return was invalid because the named entity was not a partnership member. A person signing for an LLC must also have authority under state law to bind it. Before accepting a replacement designation, the IRS should confirm that the proposed corporation is eligible to serve. If no managers have authority under state law or the operating agreement to make the LLC's business decisions, each member is treated as a member-manager under the regulations.

Ruling snapshot

  • Question: Who may validly serve and sign as tax matters partner for the LLC partnership?
  • Outcome: Advice given. A nonmember designation is invalid, and signing authority depends on state law and the member-manager rules.
  • Key authorities: IRC § 6231; Treas. Reg. § 301.6231(a)(7)-2(b)(3)

Full text (IRS public release)

ID: CCA_2017013010015343
UILC: 6231.07-00

Number: 201722025
Release Date: 6/2/2017
From:
Sent: Monday, January 30, 2017 10:01:53 AM
To:
Cc:
Bcc:
Subject: RE: TEFRA Question

Hi -----,

You are absolutely correct that you have an invalid TMP designation on the original return because the entity named is not a member of the partnership. You are also correct that only someone who has the ability under state law to bind the LLC can sign on its behalf. However, before accepting the designation, you should ensure that CORP is a valid TMP. You state that P has no member managers but it must. If there is no one designated under state law/operating agreement with the authority (alone or with others) to make management decisions necessary to conduct the business of P then each member is a member-manager. Treas. Reg. 301.6231(a)(7)-2(b)(3).

Happy to discuss at your convenience.

Thanks,
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