More SOL – But Not for Dummies

Turns out that even when Seaview Trading, LLC, AGK Investments, LLC, Tax Matters Partner, 2019 T. C. Memo. 122, filed 9/16/19, sorted out its tax matterer issue (see my blogpost “Tax Smatterer,” 3/12/15), they never managed to get their Form 1065 for the year at issue filed when due, and two (count ’em, two) attempts to get the return to IRS, so as to trigger SOL, failed.

First, after the FPAA was issued, Seaview’s accountant “…faxed to Agent J a purported copy of Seaview’s [year at issue] Form 1065 and a certified mail receipt purporting to show that the return was initially sent to the Commissioner….” 2019 T. C. Memo. 122, at p. 4. (Name omitted).

Then, two years later, Seaview’s attorney sent IRS’ counsel a copy of said Form 1065.

Seaview argues Dingman. Remember Marty Dingman? No? Then see my blogpost “The Check’s the Thing,” 6/1/11.

The issue, of course, is SOL. If the return was filed (IRS claims it wasn’t), then the FPAA, which came more than three years after both the accountant’s fax and the attorney’s letter, is barred.

Well, neither faxing to a RA nor mailing a letter to IRS’ attorney is filing in the proper place.

“Section 1.6031(a)-1(e)(1), Income Tax Regs., designates the proper place to file a Federal partnership income tax return. The designated place for filing is the ‘service center prescribed in the relevant IRS revenue procedure, publication, form, or instructions to the form.’ The instructions for Form 1065 for [year at issue] state that the proper service center for filing was the Ogden, Utah, service center. Thus, Seaview did not submit a return to the proper place for filing when it faxed a copy to Agent J… or when it sent a copy to respondent’s counsel…. Neither of the purported returns was forwarded to the Ogden service center. Additionally, there is a plethora of caselaw holding that a revenue agent is not a designated filing place.” 2019 T. C. Memo. 122, at p. 8 (name, citations, and footnote omitted, but the footnote says Seaview could have filed by magnetic media).

But Marty Dingman’s attorney gave the returns and the check to the CID, right? Yes, but.

Judge Ruwe: “Dingman is inapplicable to the present case. In Dingman, we held, in a unique factual situation, that a taxpayer filed his returns when his counsel provided delinquent returns to the IRS Criminal Investigation Division (CID). In sum, we held that in the precise situation in Dingman, the CID was an appropriate place to hand-deliver a return. Dingman is applicable only to hand-delivery of returns arising under the facts present in that case. In Dingman the taxpayer clearly intended that the returns submitted to the CID be delinquent returns with payments, and the IRS processed them as such and assessed the taxpayer’s payments. Those facts are not present in the instant case. Indeed, petitioner continues to maintain that Seaview timely filed its [year at issue] return. Dingman did not create a blanket rule that a taxpayer can file a return by whatever method he chooses; nor did it create an additional place for taxpayers to file returns beyond the places specifically designated in the Code or the regulations.” 2019, T. C. Memo. 122, at p. 9. (Citations omitted).

And Seaview never said they were filing a return. Seaview never said this was a new filing, only that they had already filed.

Dubious, Judge, dubious. IRS has what purported to be the returns. If they were slow on the uptake, that’s not Seaview’s problem. Of course, IRS cashed Marty Dingman’s check.

I’d like to see what 9 Cir. does with this.

Edited to add, 5/12/22 (an important date even without my discovery that I was right): 9 Cir tossed IRS, with a dissent. Here’s Seaview Trading, LLC v. Com’r, No. 20-72416, filed 5/11/22. And no, my colleague Peter Reilly, CPA, didn’t bring this one to my attention. I found this one all by my own self.

Further edited to add, 3/20/23: This one I did get from my esteemed colleague Peter Reilly, CPA. 9 Cir vacated the 5/11/22 opinion 11/10/22, reversed itself, and gave the win to IRS, 3/10/23. I’d like to see what the Supremes do with this.