Tax News

CCH (cch.taxgroup.com) reports:

  The Tax Court has upheld the validity of Temporary Reg. §301.6221-1T(c) and (d), which provide that a partner may only assert a partner-level defense to a penalty, addition to tax or additional amount that relates to an adjustment to a partnership item at a partnership-level proceeding through a refund action following assessment and payment of the penalty. Accordingly, a limited partner was not allowed to raise a reasonable cause defense at partnership-level proceedings, even though the penalties imposed by the IRS were the result of the conduct of the limited partner.

  According to the Tax Court, when read in conjunction, Code Secs. 6221 and
6230(c)(1)(C) and (c)(4) make clear that Congress intended that a partner may only raise partner-level defenses in a refund action filed after the close of the partnership-level proceedings. The regulations, therefore, do not impermissibly strip the court of its jurisdiction. Rather, they implement the statutory jurisdictional scheme. Furthermore, the definition of partner-level defenses in Temporary Reg. §301.6221-1T(d) as those that are personal to the partner or are dependant upon the partner's separate return does not place an impermissible limit on the types of defenses that may be raised by a partner.

New Millennium Trading, L.L.C., Dec. 57,620

Other References:

 
Code Sec. 6221

  CCH Reference - 2008FED ¶37,569.12

  Tax Research Consultant

  CCH Reference - TRC PART: 60,060