Page 96 - The TEFRA Partnership Audit Rules Repeal:

ALI CLE Live Video Webcast / “The TEFRA Partnership Audit Rules Repeal: Partnership and Partner Impacts” June 7, 2016, Jerald David August and Terence Floyd Cuff
 The “tax matters partner” designated by the entity taxed as a partnership generally represents the partnership and its partners;41
 The Internal Revenue Service makes its proposed audit adjustments in a final notice (FPAA) which starts the time period for the partnership to file for judicial review of one or more contested items, including an affirmative defense such as the running of the statute of limitations;
 Each “notice partner” is required to receive notice of important actions to be taken by the Internal Revenue Service such as the commencement of an audit or the issuance of a FPAA;
 In general, a “notice partner” has the right to participate in the audit, administrative appeal or judicial proceeding involving a TEFRA partnership audit;
 Each partner has the right to a settlement consistent with any settlement agreement the Internal Revenue Service enters into with another partner;
 On completion of the audit and administrative proceedings, each partner has the right to contest the recommended adjustments made by the Internal Revenue Service before a court of applicable jurisdiction, i.e., the Tax Court, federal district court in which venue lies, or the Court of Federal Claims; 42
assessment and collection of tax owed by a partner attributable to a partnership level item. Such exception is the consistency in filing requirement contained in (former) Section 6222. Section 6222 requires that each partner treat a partnership item in a manner which is consistent with the treatment of such partnership item on the partnership tax return. Treas. Reg. § 301.6222(a)-1(b). A partner who reports the inconsistent treatment of partnership items on the partner’s return is protected from the computational adjustments under I.R.C. § 6222(c) only as to those partnership items the inconsistent treatment of which is reported Treas. Reg. § 301.6222(b)-2(b)(1).
41 The tax matters partner (TMP) represents the partnership in a TEFRA proceeding. The regulations set forth the various operative rules and priorities. See, in general, Treas. Reg. § 301.6224(a)-1(a) (powers of TMP); I.R.C. § 6229(b)(1)(B) (extension of statute of limitations); I.R.C. § 6226(a) (selection of forum of litigation of partnership items); I.R.C. § 6228(a) (refund claim authority); I.R.C. § 6224(c)(3) (settlement authority); I.R.C. § 6229(b)(1)(B). The extension of the statute of limitations at the source partnership level applies to all tiered and indirect partners. CCA 201028037; I.R.C. §§ 6226(a), 6228(a), 6224(c)(3); Tax. Ct. R. 248; Treas. Reg. § 301.6223(g)-1 and I.R.C. § 6230(e).
42 Jurisdiction to hear a TEFRA partnership case lies with the Tax Court as well as the United States district court in which the partnership’s principal place of business is located, or
© Terence Floyd Cuff and Jerald David August, 2016
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