And Stir That Boechler Silt

That’s Judge Goeke’s word to the notice partners in Island Shoals Henry 430, LLC, Island Shoals Investments, LLC, A Partner Other Than The Tax Matters Partner, et al., Docket No. 30074-21, filed 11/16/23. The notice partners (NPs) are claiming their FPAA notices were improperly addressed, as well as the TMP FPAA notice.

And of course the validity of the TMP FPAA is the key to the Tax Court door: if that is defective, then there’s nothing for the NPs to contest.

Involved here are extra names (correct name and address but additional names added) and the addresses of individual NP and indirect partner (also a NP). Judge Goeke, invoking the usual somber reasoning, etc., says IRS can use additional info like individual income tax returns to get correct addresses, and TMPs and NPs should let their mailroom people know how to deal with incoming IRS mail, especially when their office receives mail for several different entities.

This all goes off on BoP. If IRS has a correct Certified Mail Log, or can fill in enough blanks on a missing one, then the TMP FPAA was properly mailed, even if not received.

“USPS Form 3877 or CML that is incomplete or defective in some way does not create a rebuttable presumption. Where the presumption does not apply, respondent is subject to a burden of production without the presumption. USPS Form 3877 or CML with omissions or defects is probative of proper mailing and may be combined with additional evidence to meet respondent’s burden. Additional evidence can be evidence of the IRS’s mailing practices corroborated by direct testimony or documentary evidence that the FPAA was placed in the USPS’s custody. Thus, the IRS’s failure to comply precisely with established procedures may not be fatal if respondent presents evidence that is otherwise sufficient to prove mailing. Where the taxpayer has rebutted the presumption, we weigh the evidence and determine on the basis of the preponderance of the evidence whether respondent mailed the FPAA.” Order, at p. 10. (Citations omitted).

Another TEFRA legacy is notice partner addresses. Judge Goeke delivers the following homily for historians (or those cleaning up leftover messes).

“Section 6223(c) does not mandate use of the Schedule K-1 address when that subsection is read in its entirety. Petitioners cite only subsection (c)(1). Section 6223(c)(1) provides that respondent shall use the names, addresses, and profits interests shown on the partnership return ‘except as provided in paragraphs (2) and (3).’ Relevant for purposes of Mr. W’s notice partner FPAA, section 6223(c)(2) allows respondent to prescribe regulations for the use of additional information that the TMP or any other person furnishes to him. It states that respondent ‘shall use additional information’ that is furnished to him in accordance with the regulations.” Order, at pp. 18-19. (Name omitted).

Judge Goeke trudges through the Regs, finds most recent individual income tax return addresses satisfy same. Ditto for indirect partner (sole member of a pass-through which is a partner).

OK, so the TMP FPAAs were properly mailed. But does Tax Court have jurisdiction over NP FPAA beeves? NPs have the right to be heard that their NP FPAAs were improperly mailed when they get a SNOD for an affected item (that is, an individual item on their personal return that passes through from their partnership interest).  Here apparently no SNOD.

So Judge Goeke invites them to a show-and-tell.

“We will treat our conclusion that respondent actually and properly mailed the notice partner FPAAs to petitioners as a preliminary determination and invite the parties to brief the issue of whether the Court has jurisdiction in a partnership case to decide whether respondent mailed a notice partner FPAA. The parties should address whether our jurisdiction to do so should be affected by the fact that the Petitions were filed by notice partners and were untimely filed in the absence of equitable tolling. To clarify, we do not want the parties to address further any factual or legal issues relating to our preliminary determination that the notice partner FPAAs were actually and correctly mailed. We will not consider any further arguments on the issues relating to the notice partner FPAAs‘ mailing that we have already determined herein. The parties should also address petitioners’ argument that the section 6226(b) period for filing a petition in a partnership case is a nonjurisdictional deadline that is subject to equitable tolling where the circumstances of the untimely filing warrant it.” Order, at pp. 21-22. (Footnote omitted, but it says this preliminary determination is non-preclusive unless it turns out Judge Goeke did have jurisdiction so to find.)

Good old TEFRA. Cain’t hardly wait for the postal pushbacks post-BBA, when only representatives are in play.