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TAX MATTERS

the limitation period never began.
Holding: The Ninth Circuit
held that Seaview had filed its 2001
partnership return in 2005 when
it faxed a copy of the return to the
IRS agent. Thus, it reversed the Tax
Court’s judgment and remanded the
case for proceedings consistent with
its holding.
The Ninth Circuit noted that
“filed” and “filing” are not defined in
the Code but that Sec. 6230(i) states
that partnership returns “shall be filed
or made at such time, in such man-
which the partnership claimed it or mailed it to the IRS attorney, because ner, and at such place” as regulations
had submitted more than three years it did not submit it in the manner and provide. Regs. Sec. 1.6031(a)-1(e)
earlier but the IRS said it had not to the place prescribed in the Code or specifies the time for filing as on or
received. Consequently, the court held, regulations. Moreover, the Tax Court before the 15th day of the fourth
a Final Partnership Administrative held, the copies of the Form 1065 it sent month after the end of the partner-
Adjustment (FPAA) issued to the the IRS agent and IRS attorney did not ship’s tax year and the place as the
partnership was barred by the statute constitute a return under the tests of service center identified in the form
of limitation. Beard, 82 T.C. 766, 777 (1984), aff ’d, 793 or its instructions or in a relevant
Facts: Seaview Trading LLC, a F.2d 139 (6th Cir. 1986), one of which is revenue procedure or publication.
limited liability company, was classified that a return must purport to be a return. However, the court found, the regula-
as a partnership for federal tax purposes When Seaview’s accountant faxed the tion does not address delinquent
and subject to audit procedures under 2001 return copy and its attorney mailed returns, and no regulation prohibits
the Tax Equity and Fiscal Responsibility it, the Tax Court found that Seaview did a delinquent return’s filing by its
Act of 1982 (TEFRA), P.L. 97-248. not intend by so doing to file the return delivery to a requesting IRS official,
In 2005, Seaview received a letter but, rather, to indicate that it had been the court stated.
from an IRS agent saying the Service previously filed. For a delinquent return, according
had not received the LLC’s 2001 Form Seaview appealed the Tax Court’s to the Ninth Circuit, whether the
1065, U.S. Return of Partnership Income. decision to the Ninth Circuit. return was filed should be based on
Seaview’s accountant faxed the agent a Issues: Seaview argued in the Ninth the ordinary meaning of the term
signed copy of the return, which Seaview Circuit that a return is filed when it “filing.” Based on Supreme Court and
claimed to have filed in 2002. The IRS is delivered to and received by an IRS Tax Court precedent, as well as its
then selected Seaview’s 2001 tax year for official who requests it, as it did when own precedent in Hanson, 2 F.3d 942
examination and requested more infor- it sent its 2001 return to the revenue (9th Cir. 1993), the Ninth Circuit
mation, including all signed copies of its agent in 2005. That started the three- concluded that under the ordinary
2001 return. In 2007, Seaview’s attorney year limitation period, Seaview argued, meaning of the word “filing,” a
mailed another signed copy of the 2001 for the IRS to make an assessment delinquent partnership return is filed
Form 1065 to an IRS attorney. under Sec. 6229 (subsequently repealed for purposes of former Sec. 6229(a)
In 2010, the IRS issued Seaview’s tax with the replacement of TEFRA audit when an IRS official authorized to
matters partner the FPAA, disallowing procedures by those of the Bipartisan obtain and receive a partnership’s tax
all income, loss, and expense amounts Budget Act, P.L. 114-74, for partner- return notifies the partnership of the
for 2001. The IRS reiterated that it had ship returns filed after Dec. 31, 2017). delinquent return and requests it, the
no record of the 2001 return’s having Thus, Seaview contended, the limita- partnership provides it in the manner
been filed. Seaview petitioned the Tax tion period had expired before the requested, and the IRS official receives
Court, challenging the adjustment of its IRS adjusted its losses in its October it. Thus, it held that Seaview had filed
claimed losses. 2010 FPAA. its Form 1065 for 2001 when the IRS
The Tax Court held that Seaview The IRS again argued that Seaview had agent received it in September 2005
did not file a tax return for 2001, either never filed its 2001 return. Therefore, it and that the FPAA in October 2010
when it faxed the copy to the IRS agent contended, under former Sec. 6229(c)(3), was untimely.

34 | Journal of Accountancy August 2022