Tax News

CCH (cch.taxgroup.com) reports:

  Due to a conflict of interest, a limited partner was not bound by an extension of the assessment period signed by the partnership's tax matters partner (TMP). The TMP's plea agreement with the IRS for crimes unrelated to the partnership created a disabling conflict of interest that disqualified him from binding the partnership when he consented to extend the statute of limitations at the IRS's request. The TMP had pled guilty to structuring crimes in exchange for his agreement to cooperate fully with the IRS in order to resolve his tax liability and any tax liability and examination of the partnership. The plea agreement was a clear incentive for the TMP to ingratiate himself to the government, particularly since he would not be sentenced until almost a year later. The government knew that the TMP and the limited partner had conflicting interests when the TMP executed the requested consents, but continued to seek and secure the TMP's consents, without the limited partners' knowledge, until several years into the TMP's incarceration. Consequently, the consents executed by the TMP were rendered invalid, and the tax adjustments proposed by the IRS to the partnership's returns were time-barred.

  Unpublished opinion reversing the Tax Court, 92 TCM 106,
Dec. 56,585(M), TC Memo. 2006-164.

Leatherstocking 1983 Partnership, CA-2, 2008-2 USTC ¶50,597

Other References:

 
Code Sec. 6221

  CCH Reference - 2008FED ¶37,569.01

 
Code Sec. 6229

  CCH Reference - 2008FED ¶37,749.10

 
Code Sec. 6231

  CCH Reference - 2008FED ¶37,849.30

  CCH Reference - 2008FED ¶37,849.35

  Tax Research Consultant

  CCH Reference - TRC PART: 60,354