§6233 — Interest and penalties
22 cases·6 followed·2 distinguished·14 cited—27% support
Statute Text — 26 U.S.C. §6233
Except to the extent provided in section 6226(c), in the case of a partnership adjustment for a reviewed year—
interest shall be computed under paragraph (2), and
the partnership shall be liable for any penalty, addition to tax, or additional amount as provided in paragraph (3).
The interest computed under this paragraph with respect to any partnership adjustment is the interest which would be determined under chapter 67 for the period beginning on the day after the return due date for the reviewed year and ending on the return due date for the adjustment year (or, if earlier, the date payment of the imputed underpayment is made). Proper adjustments in the amount determined under the preceding sentence shall be made for adjustments required for partnership taxable years after the reviewed year and before the adjustment year by reason of such partnership adjustment.
Any penalty, addition to tax, or additional amount shall be determined at the partnership level as if such partnership had been an individual subject to tax under chapter 1 for the reviewed year and the imputed underpayment were an actual underpayment (or understatement) for such year.
In the case of any failure to pay an imputed underpayment on the date prescribed therefor, the partnership shall be liable—
for interest as determined under paragraph (2), and
for any penalty, addition to tax, or additional amount as determined under paragraph (3).
Interest determined under this paragraph is the interest that would be determined by treating the imputed underpayment as an underpayment of tax imposed in the adjustment year.
Penalties, additions to tax, or additional amounts determined under this paragraph are the penalties, additions to tax, or additional amounts that would be determined—
by applying section 6651(a)(2) to such failure to pay, and
by treating the imputed underpayment as an underpayment of tax for purposes of part II of subchapter A of chapter 68.
For rules allowing deposits to suspend running of interest on potential underpayments, see section 6603.
Treasury Regulations
- Treas. Reg. §Treas. Reg. §301.6233-1 Extension to entities filing partnership returns
- Treas. Reg. §Treas. Reg. §301.6233-1(a) Entities filing a partnership return.
- Treas. Reg. §Treas. Reg. §301.6233-1(b) Partnership return filed but no entity found to exist.
- Treas. Reg. §Treas. Reg. §301.6233-1(c) Exceptions.
- Treas. Reg. §Treas. Reg. §301.6233-1(d) Effective dates.
22 Citing Cases
However, pursuant to section 6233(a) and (b), the TEFRA procedural provisions applicable to partnerships do apply "to the extent provided by regulations" to an entity that has filed a partnership return and to the persons holding 30See, e.g., cases cited infra note 37 on proper application ofthe six-year statute oflimitations under
Section 6233 provides that if a partnership return is filed for a year but it is determined that no partnership exists, the subchapter that governs the procedure for taxing partnership items still applies to the extent provided in the regulations .
Willner contends that section 6233 does not apply to him because he was not a partner in the entity that filed a partnership return for 1986.
o which respondent must interpretthe partnership agreement each year", E at 248, and we concluded that said approach - 84 - "best serves the purpose ofsimplicitythat is behind the partnership audit and litigation provisions", ist We also looked at section 6233, which prescribes in general that where an entity files a return as a partnership, it will be subject to the TEFRA procedures even though it is later determined that the putative partnership is not a partnership for tax purposes.
Pursuant to section 6233 and the regulations promulgated thereunder, if an entity that has filed a partnership return is determined not to be a partnership or not to exist, the TEFRA partnership procedures (statutory and regulatory) will apply to the entity, its items, and persons holding an interest in the entity.
Section 6233 provides that if a partnership return is filed for a year but it is determined that no partnership exists, the subchapter that governs the procedure for taxing partnership items still applies to the extent provided in the regulations. The regulations provide that the tefra provisions will generally continue to apply if a purported part
§ 301.6233-1. Under TEFRA, partnership-related tax matters are addressed in two stages: a partnership-level proceeding to adjust partnership items and a partner-level adjustment to make resulting affected item adjustments in the tax liability of the individual partner. Under TEFRA, the Court’s jurisdiction in a partnership-level
301.6233-1, Proced. & Admin. Regs., respondent may treat BRC as a partnership for the tax year for purposes of subchapter C of chapter 63 of the Code. See Marcy v. Commissioner, T.C. Memo. 2018-42, at *10 (“The filing of a partnership return, even when an entity is not in fact a partnership, triggers the application of the TEFRA
301.6233-1, Proced. & Admin. Regs., respondent may treat BRC as a partnership for the tax year for purposes of subchapter C of chapter 63 of the Code. See Marcy v. Commissioner, T.C. Memo. 2018-42, at *10 (“The filing of a partnership return, even when an entity is not in fact a partnership, triggers the application of the TEFRA
We also looked at section 6233, which prescribes in general that where an entity files a return as a partnership, it will be subject to the TEFRA procedures even though it is later determined that the putative partnership is not a partnership for tax purposes.
conflict here--the Fifth Circuit was analyzing a real activity ofa real partnership. In contrast, what we have here are tax nothings or mere "hypothetical entities," which we treat as ifthey were partnerships only as a matter ofTEFRA procedure, see sec. 6233. " The FPAAs also asserted that neither 541 and 6611 nor their purported partners entered into the option positions or purchased foreign currency or stock with a profit motive for purposes ofsection 165(c)(2). See Notice 2000-44, 2000-2 C.B
conflict here--the Fifth Circuit was analyzing a real activity ofa real partnership. In contrast, what we have here are tax nothings or mere "hypothetical entities," which we treat as ifthey were partnerships only as a matter ofTEFRA procedure, see sec. 6233. " The FPAAs also asserted that neither 541 and 6611 nor their purported partners entered into the option positions or purchased foreign currency or stock with a profit motive for purposes ofsection 165(c)(2). See Notice 2000-44, 2000-2 C.B
conflict here--the Fifth Circuit was analyzing a real activity ofa real partnership. In contrast, what we have here are tax nothings or mere "hypothetical entities," which we treat as ifthey were partnerships only as a matter ofTEFRA procedure, see sec. 6233. " The FPAAs also asserted that neither 541 and 6611 nor their purported partners entered into the option positions or purchased foreign currency or stock with a profit motive for purposes ofsection 165(c)(2). See Notice 2000-44, 2000-2 C.B
ined that the delay in petitioners’ learning of their snowballing liability is a matter they should address with the TMPs of their partnerships. We agree. TEFRA contemplates that it is generally a TMP’s responsibility to keep his partners informed.3 Sec. 6233(g); sec. 301.6223(g)-1T, Temporary Proced. & Admin. Regs., 52 Fed Reg. 6785 (Mar. 5, 1987). We decline to decide that the failure of the IRS to contact petitioners sooner is reason to compel respondent to accept a settlement of approximatel
Regs., provides that the term “partnership item” includes “contributions to the partnership”.
se, Rhone-Poulenc Surfactants & Specialties, L.P., v. Commissioner, 114 T.C. __ (2000). In the partnership case, GAF Chemicals and the Commissioner are in agreement that the primary questions constitute partnership items.7 7Regulations authorized by sec. 6233 provide: Sec. 301.6233-1T. Extension of entities filing partnership returns, etc. (Temporary).–-(a) Entities filing a partnership return. Except as provided in paragraph (d)(1) of this section, the provisions of subchapter C of chapter 63 o
use of our holding that we lack jurisdiction, we need not address petitioner’s alternative ground. The TEFRA partnership provisions have been amended since their enactment in 1982 and now constitute secs. 6221 through 6234. Regulations authorized by sec. 6233 provide: Sec. 301.6233-IT. Extension of entities filing partnership returns, etc. (Temporary). — (a) Entities filing a partnership return. Except as provided in paragraph (d)(1) of this section, the provisions of subchapter C of chapter 63
6233; Consolidated Cable, Ltd. v. . Commissioner, supra; sec. 301.6233-1T(c)(1), Temporary Proced. & Admin. Regs., 52 Fed. Reg. 6795 (March 5, 1987). In order for us to determine whether we have jurisdiction over the adjustments made by respondent, we must determine whether FFC #2 was a valid partnership for the years in issue. Alhouse v. Comm