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TAX TRENDS
Analysis of and reflections on
recent cases and rulings.
Author: In March 2004, the IRS opened an
James A. Beavers, CPA, CGMA, Practice & Procedures audit of Robert Kotick for 2001 and
J.D., LL.M. 2002. During the audit, Kotick gave the
Meaning of ‘filed’ defined IRS an unsigned copy of Seaview’s 2001
for purposes of delinquent Form 1065. Because partnership returns
partnership returns are required to be audited separately, the
The Ninth Circuit held that for IRS did not audit Seaview as part of its
Delinquent purposes of the limitation period for audit of Kotick.
In July 2005, an IRS revenue agent
adjustments of partnership losses under
partnership returns former Sec. 6229(a), a delinquent part- sent Seaview a letter that notified the
are ‘filed’ when nership return has been “filed” when an LLC that the IRS had not received its
IRS official authorized to obtain and re-
2001 federal partnership income tax
they are delivered ceive delinquent returns informs a part- return. The IRS, in an attachment to
by the requested nership that a tax return is missing and the letter, asked Seaview if it had filed
method to and requests that tax return, the partnership a return and, if so, what type of return
was filed and when and at which service
provides the tax return in the manner
received by an IRS requested, and the IRS official receives center Seaview filed it. It also requested
official authorized the tax return. that the LLC provide all retained cop-
ies of the return, as well as copies of
to receive such Background receipts and other proof of mailing for
returns; property of Seaview Trading LLC is classified as a the return. In September 2005, Seaview’s
accountant faxed the IRS revenue agent
partnership for federal tax purposes. In
a taxpayer may be 2001, Robert Kotick was Seaview’s ma- a signed copy of Seaview’s 2001 Form
used to satisfy the jority partner, owning over 99% of the 1065 return, along with a certified mail
tax liabilities of a life company. For 2001, Seaview prepared a receipt for its mailing.
Form 1065, U.S. Return of Partnership
In October, the IRS sent Seaview a
partner. Income, that reported a $35.5 million letter telling the LLC that it had been
loss from a tax-shelter transaction. selected for audit. Again, the IRS asked
Seaview believed it filed this return for a copy of the 2001 return. It further
in July 2002, having mailed it to the asked for any amendments to the return
proper IRS service center in Ogden, and documents related to certain entries
Utah. The IRS, however, had no record on Seaview’s return.
of receiving Seaview’s 2001 return. As part of its examination of the PHOTO BY ARCHEOPHOTO/ISTOCK
Although Seaview had a certified mail LLC, the IRS interviewed Seaview’s
receipt for the return’s mailing, it con- accountant in January 2006 and inter-
ceded that it could not prove that the viewed Kotick in June 2007. During
IRS received its 2001 return in 2002. both interviews, the IRS acknowledged
50 August 2022 The Tax Adviser
