And No, That’s Not A Typo

 Our latest case of going postal involves Mr. Richard Postma of Grand Rappids (sic), MI, who claims he’s a notice partner but not a tax matters partner in Taurus FX Partners, LLC, Richard Postma, A Partner Other Than The Tax Matters Partner, 2013 T. C. Memo. 168, filed 7/22/13.

Richard was the sole member of FX Trading, LLC, which in turn was a partner in Taurus. Bricolage Capital, LLC was both managing partner and tax matters partner of Taurus, but FX was notice partner.

Then FX sold its interest to Littlefield, a Sub S of which Richard was sole shareholder.

When IRS began looking at Taurus’ return for the years in issue, they sent a Notice of Beginning of Administrative Proceeding (NBAP) to FX care of Bricolage, and to FX and to Richard at the Grand Rappids (sic), MI, address.

IRS dealt directly with Richard, asking him to send documents concerning his investment in Taurus and also asking him to sign a Form 872-P SOL extender, which he signed both as Authorized Signer and as TMP. His representative stated in a covering letter that Richard never was formally designated as TMP.

Bricolage, true to its name as something thrown together out of whatever came to hand, apparently did nothing while this was going on, but did file bankruptcy, thus disqualifying itself as TMP and turning all its partnership items into nonpartnership items.

IRS got around to sending the FPAA to Bricolage and some other investors, and also to FX at another Grand Rapids address (this time getting the spelling right).

Richard claims the FPAA was invalid because not sent to the proper partner, namely, him, as IRS knew all about him. And his petition was filed after the 150-day window had closed.

No, says Judge Buch, you’re too late, Richard.

Since partners come and go, and adjusted items may spread over years, “(T)he last known address rules applicable to notices of deficiency do not apply to FPAAs. Section 6223(c)(1) instructs that the partnership return is the starting point for identifying where to mail notices. The IRS must update that information only to the extent the updated information is provided in accordance with the regulations. The regulations require that updates be made by submitting a written statement, generally to the service center where the partnership return was filed….” 2013 T. C. Memo. 168, at pp. 8-9 (footnotes omitted, but you can tell Judge Buch was on law review, because he loves footnotes).

There’s a five-part test for what has to go into the notice, and nothing that Richard can produce shows he ever sent the relevant service center anything that comes close.

If you’re interested, the required notice has to (a) identify the partnership, each partner for whom information is supplied, and the person supplying the information by name, address, and taxpayer identification number; (b) explain that the statement is furnished to correct or supplement earlier information with respect to the partners in the partnership;(c) specify the taxable year to which the information relates; (d) set out the corrected or additional information; and (c) be signed by the person supplying the information.

And IRS can mail a generic NBAP or FPAA addressed to “Tax Matters Partner” at the partnership’s address as shown on the Form 1065 for the year at issue, without filling in the TMP’s name.

Richard says his prior dealings with IRS show IRS knew right well who and where he was. Says Judge Buch, while IRS “may” use whatever information they have to send you notices, that’s permissive and not prescriptive. See my blogpost “A Busy Day”, 9/10/12, which quotes one of the regs Judge Buch quotes here in Taurus.

IRS can send you notices if they know where you are, even if you haven’t told them per the regs, but they are not required to, and you have no beef if they don’t.

So Richard, you’re late and you’re out.