Attorney-at-Law

THE TMP IS DEAD – LONG LIVE ?

In Uncategorized on 02/17/2016 at 16:30

Berkshire Resources, LLC, the TMP of Berkshire 2006-5, LLP, was dead, to begin with. The late Berkshire Resources was administratively dissolved by the State of Wisconsin and the SEC was suing it for fraud. IRS issued a FPAA disallowing deductions, but the late Berkshire Resources, LLC, being late, did nothing. So it’s time for the notice partners and the five-percenters to step up.

Carl F. Hattler, 2016 T. C. Memo. 25, filed 2/17/16, was a notice partner in Berkshire 2006-5, LLP, (see Section 6223 for more about how one gets to be a notice partner). He jumps in after Day 90, but after Day 150, so he’s out. His petition is a day late, and he’s more than a dollar short.

Carl F. says Berkshire 2006-5, LLP, had no address; it too was dead. IRS should have known this. IRS says, “So what?” IRS sent the FPAA to the address shown on last tax return. TEFRA doesn’t follow the “last known address” mailing-of-deficiency rules. I’ve blogged this before. There are specific requirements for the notice the partnership (or anyone acting on its behalf) must give to IRS, and where to give it. Nobody did.

Carl F. says the FPAA is invalid because the late Berkshire Resources was dead. Wrong, says Judge Buch. “Even assuming that Berkshire Resources was no longer the TMP because it had been administratively dissolved, the Commissioner satisfied the notice requirement under section 6223(a) because the generic FPAAs mailed to the ‘Tax Matters Partner’ at the partnerships’ addresses are valid.” 2016 T. C. Memo. 25, at p. 8.

Carl F. claims the FPAA is invalid because IRS didn’t choose a new TMP. Wrong again, Carl F. “The Commissioner’s authority to select a TMP is very limited. First, the partnership must not have designated a TMP or the TMP’s authority must have terminated. Then, the TMP is the general partner with the largest profits interest by operation of law. Only if that test is ‘impracticable to apply’ can the Commissioner select a TMP. And in any event, there is simply nothing in section 6231(a)(7) that requires the Commissioner to select a TMP.” 2016 T. C. Memo. 25, at pp. 8-9. (Footnotes omitted).

Anyway, Carl F. got the notice partner’s notices of the FPAA in time for him to petition timely. That he was a day late in filing is his problem.

And Rule 245(c) doesn’t help Carl F. That applies only to intervention once jurisdiction has been established by petitioner; it can’t create jurisdiction where there wasn’t any.

Footnote to the foregoing: Since the Revenue Act of 2015 (known to some who like cutesy acronyms as the Protecting Americans from Tax Hikes Act) has eliminated TEFRA, with its concomitant FPAAs, TMPs, notice partners and five-percenters, the foregoing appears as a matter of record.

 

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