In Uncategorized on 08/28/2013 at 20:57

The readers of my blogposts (“the few, the happy few”, to paraphrase a much finer writer) should not think I have a grudge against tax matters partners. It’s true I’ve stated that their duties as partners exceed those as tax matterers; see my blogpost “Bang – A Warning to Tax Matters Partners (and their advisors)”, 1/5/11, and “Wise Guys?”, 4/22/13. I’ll come back to “Wise Guys?” later.

But I feel it necessary to remind the TMPs, as they’re known in TEFRA circles, and their colleagues the notice partners and the five-percenters, that they’re all in it together. And therefore the exercise of diligence and prompt internal communication are essential.

As an ornament to the Supreme Court once remarked, “A trustee is held to something stricter than the morals of the market place. Not honesty alone, but the punctilio of an honor the most sensitive, is then the standard of behavior… the level of conduct for fiduciaries [has] been kept at a level higher than that trodden by the crowd.” (Citation omitted).

So today’s illustration is found in 2013 T.C. Memo. 202, filed 8/28/13, involving Biomage, LLC, Front Row Enterprises LLC, Tax Matters Partner. It’s the usual FPAA and Tax Court petition case.

IRS moves to dismiss the petition as untimely.

Front Row claims IRS never mailed it the FPAA, but if it did, then the petition was timely, as they sent it within 150 days of the date that IRS mailed a notice partner a copy of the FPAA.

Ch J Thornton brushes aside the claim by Front Row that they never got the FPAA, and that the USPS Form 3877 proof of mailing misstates the tax year involved; the IRS employee who prepared the 3877 swears it was a mistake. And USPS confirms delivery of the certified letter to the address given by Front Row.

“Petitioner asserts alternatively that if the IRS mailed an FPAA to petitioner, then the petition was filed timely as to the notice partner copy so as to invoke the Court’s jurisdiction. To that end, petitioner contends that it filed the petition as a partner other than the TMP within 150 days of the day that the IRS mailed petitioner the notice partner copy in its capacity as a notice partner of Biomage. We disagree with petitioner as to its understanding of the 150-day petitioning period (i.e., 90 days for the TMP plus 60 days for notice partners). Contrary to petitioner’s suggestion that the period begins on the day that the notice partner copy was mailed to petitioner, section 6226(a) and (b) requires that the count begin on the day that the FPAA was mailed to the TMP. See Han Kook LLC I-D v. Commissioner, 102 T.C.M. (CCH) at 259. The count, therefore, began on June 4, 2010, and petitioner’s petition was untimely.” 2013 T. C. Memo. 202, at p. 12.

So Han Kook cooks Biomage’s goose (sorry, guys).

And as I said in “Wise Guys?”, “Tax Matters Partners, read and heed; send in that petition at once. And five-percenters and notice partners (Section 6226(b)(1), check in with the TMP and be ready to roll on Day 91.”

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