From: Kelley Lynch <email@example.com>
Date: Sat, Nov 29, 2014 at 3:22 PM
Subject: Re: Corporate Federal Tax Matters
To: Jeffrey Korn cc: IRS & Multiple Parties
I was appointed Tax Matters Partner, by Richard Westin, with respect to Traditional Holdings, LLC. That was addressed on the federal tax returns. Did the LA Superior Court judgment change that fact? Based on Leonard Cohen's legal theory that he is the Alter Ego of this entity, were the corporate tax returns amended to address the Tax Matters Partner issue or was this fraudulent information merely transmitted to IRS and left uncorrected? Where are any potential or past tax notices to TH being sent? Are they being sent c/o Richard Westin?
Under the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), 3
Pub. L. No. 97-248, sec. 402(a), 96 Stat. at 648, any partnership must designate
one of its partners as the tax matters partner (TMP) to handle its administrative
issues with the Commissioner and manage any resulting litigation. The purpose of
audits at the partnership level, and of requiring partnerships to have a TMP, is to
have a single point of adjustment for all partnership items at the partnership level.
Kligfeld Holdings v. Commissioner, 128 T.C. 192, 200 (2007); see sec.
6231(a)(7); sec. 301.6231(a)(7)-1, Proced. & Admin. Regs.
Tax Matters Partner (TMP)
- Under the TEFRA unified proceedings, a statutory representative acts as the liaison between the partners, the Service, and the courts. That person is referred to as the Tax Matters Partner (TMP) in the case of a TEFRA partnership .
- The TMP plays a pivotal role in any partnership proceeding for a specific tax year.
- The TMP works with the Service and the courts during a unified proceeding. Failure of the TMP to fulfill responsibilities regarding notices or other acts does not affect the applicability of the proceeding or adjustment to any partner. See IRC 6230(f).
- These are the duties performed by the TMP.
- Furnishes to the Service the name, address, profits interest, and taxpayer identification number of each partner during the tax year for which a Notice of Beginning of Administrative Proceeding (NBAP) is issued and provides revisions and additional information as may be necessary. See IRC 6230(e).
- Sets the time and place for meetings with the Service regarding partnership matters. See Treas. Reg. 301.6224(a)-1.
- Executes a consent which extends the statute of limitations on the income tax returns of all of the partners. See IRC 6229(b).
- Binds non-notice partners to any settlement negotiated with the commissioner by stating the intention to bind non-notice partners in the executed agreement form, unless a non-notice partner has filed a statement in accordance with Treas. Reg. 301.6224(c)-1(c). See IRM 22.214.171.124 for language to be included on the settlement agreement.
- Chooses the forum in which the partnership adjustments will be litigated by petitioning the Tax Court, U. S. Court of Federal Claims, or a U. S. District Court within the first 90 days after the Final Partnership Administrative Adjustment (FPAA) is mailed. See IRC 6226(a).
- Intervenes in a court action brought by a partner other than the TMP. See IRC 6226(b)(6).
- Executes a stipulated decision under Tax Court Rule 248(a) that binds all parties to the action in a judicial proceeding before the Tax Court. See Tax Court Rule 248(a).
- Files an Administrative Adjustment Request (AAR) on behalf of the partnership and petitions the Tax Court, a U. S. District Court, or the U. S. Court of Federal Claims if the AAR is not allowed in whole or in part. See IRC 6227(c) and IRC 6228(a)(1).
- Executes a consent which extends the time for filing suit with regard to an AAR. See IRC 6228(a)(2)(D).
- The TMP, if he is a general partner of a pass-thru partner which is a TEFRA partnership, has the following additional duties:
- Binds unidentified indirect partners to any settlement agreement negotiated with the Commissioner. See Treas. Reg. 301.6224(c)-2.
- Forwards a copy of any notice or other information received regarding the partnership proceeding to the person(s) holding an interest through the pass-thru partner within 30 days of receipt. See Treas. Reg. 301.6223(h)-1.
- The Tax Court sets out certain additional TMP responsibilities on cases in its jurisdiction.
- Notifies partners of the filing of a petition by the TMP within 5 days of receiving the Notification of Receipt of Petition from the Court. Tax Court Rule 241(f)(1) sets out the items to be included in the notice.
- Provides partners a copy of the petition filed by the TMP or any other partner within 10 days of the receipt of a request from a partner. See Tax Court Rule 241(g).
- Provides all partners (except participating partners) with copies of the Commissioner's motion for entry of decision, the proposed decision, the certificate of date of filing, and a copy of Tax Court Rule 248 within 3 days of receipt of the Commissioner's certificate of service. See Tax Court Rule 248(b)(3).
- Provides all parties to the action with a copy of the statement from the Service disclosing a settlement agreement within 7 days of receipt of the statement from the Commissioner. See Tax Court Rule 248(c)(2).
- The TMP works with the partners during a unified proceeding.
- The TMP must provide all non-notice partners (other than indirect partners) with copies of any official IRS notice. The Notice of Beginning of Administrative Proceeding (NBAP) must be furnished to non-notice partners within 75 days of the date it was mailed by the Service. The Final Partnership Administrative Adjustment (FPAA) must be furnished to such partners within 60 days of the date it was mailed by the Service. See Treas. Reg. 301.6223(g)-1(a)(1) for NBAP, Treas. Reg. 301.6223(g)-1(a)(2) for FPAA, and Treas. Reg. 301.6223(g)-1(a)(3) for exceptions.
- The TMP is required to keep partners informed of all administrative and judicial proceedings relating to the adjustments at the partnership level of partnership items (IRC 6223(g)).
- The partners that the TMP must keep informed include all notice partners, notice group representatives, and all other partners (except those listed in Treas. Reg. 301.6223(g)-1) within 30 days of taking the action or receiving the information with respect to the matter.
- The information that the TMP should furnish to partners is described in Treas. Reg. 301.6223(g)-1(b).
- Closing conference with the examining agent.
- Proposed adjustments, appeal rights, and requirements for filing the protest.
- Time and place of any appeals conference.
- Acceptance by the Service of any settlement offer.
- Consent to the extension of the period of limitations with respect to all partners.
- Filing of an Administrative Adjustment Request (AAR) on behalf of the partnership.
- Filing of a petition for judicial review of an FPAA or AAR filed on behalf of the partnership.
- Filing of any appeal to any judicial determination of an FPAA or AAR filed on behalf of the partnership.
- Final judicial redetermination.
- The TMP does NOT have to inform the following:
- Partners whose partnership items became nonpartnership items before 30 days after taking the action or receiving the information.
- Any indirect partners who have not been identified to the TMP at least 30 days before the TMP is required to provide the information.
- Any spouse (other than one who is separately listed or has a separate interest in the partnership) who filed a joint return with a partner who received the notice/information.
- Members of a notice group which receive the notice on his/her behalf.
- Partners who have received the information from another person.
- The TMP may appoint an attorney-in-fact by use of Form 2848 (Power of Attorney and Declaration of Representative).
- The following suggestions are recommended for completing Form 2848:
- The TMP should execute the form noting his status as the TMP.
- The name and address of the partnership should be clearly set forth.
- Section 3, Matters, under the heading, "Description of Matter," insert "TEFRA partnership proceedings."
- Section 3, Matters, under the heading, "Tax Form Number," insert "1065."
- It is recommended that the TMP, not a representative, sign legally significant documents, such as consents on behalf of the partnership. See Treas. Reg. 301.6229(b)-1 for conditions under which a consent may be signed by a person other than the TMP. Also see IRM 126.96.36.199.
- The TMP may not be able to delegate to a representative the authority to bind non-notice partners to a settlement agreement under IRC 6224, or, under certain circumstances, to bind all partners to a stipulated decision under Tax Court Rule 248.
- See Treas. Reg. 301.6223(c)-1(e) and IRM 188.8.131.52 for instructions regarding power of attorney designations by a partner.
- The rules for the designation of the TMP of a partnership are set forth in Treas. Reg. 301.6231(a)(7)-1.
Caution:If a petition has been filed with the Tax Court, only the court may appoint or remove the TMP (Tax Court Rule 250).
- A partnership may designate a general partner, but not a limited partner, as its TMP.
- If the partnership does not designate a TMP or if the prior designation of the TMP has been terminated without subsequent designation, the TMP will be determined according to Treas. Reg. 301.6231(a)(7)-1(m) (largest profits interest rule) or selected by the Commissioner pursuant to Treasury Reg. 301.6231(a)(7)-1(n) (selection where largest profits interest rule is impracticable). See IRM 184.108.40.206.5.3.5 for discussion of largest profits interest rule. See IRM 220.127.116.11.5.3.6 for discussion of selection by the Commissioner where the largest profits interest rule is impracticable.
- The TMP must be determined for each tax year.
- Treas. Reg. 301.6231(a)(7)-1 must be adapted for a LLC classified as a partnership because the LLC has members, not general or limited partners.
- Treas. Reg. 301.6231(a)(7)-2 treats member managers of an LLC as general partners solely for the purpose of the designation or selection of a TMP. For purposes of this section only:
- A member-manager means a member of the LLC who, alone or with others, is vested with the continuing exclusive authority to make the management decisions necessary to conduct the business for which the LLC was formed.
- If no member-managers have this authority, each member is treated as a member-manager (general partner).
- The person or entity that is allowed to be the TMP depends on whether the partnership designates its TMP.
- If the partnership makes a designation, the person/entity eligible to become the TMP is either:
- a general partner in the partnership at some time during the tax year for which the designation is made, or
- a general partner in the partnership at the time the designation is made.
Note:Commissioner consent is required to designate a non-US person as TMP, unless there is no eligible US person.
- If the partnership does NOT make a designation, the person/entity eligible under Treas. Reg. 301.6231(a)(7)-1(m) (largest profits interest rule) must be a general partner at the close of the tax year. See IRM 18.104.22.168.5.3.5 for discussion of largest profits interest rule.
Caution:A general partner whose designation as TMP was terminated as a result of its filing for bankruptcy cannot be reselected as TMP under the largest profits interest rule.
- If the partnership does NOT make a designation and it is impracticable to apply the largest profits interest rule, the eligible person/entity may be selected by the Commissioner under Treas. Reg. 301.6231(a)(7)-1(n). A TMP selected by the Commissioner may be ANY partner during the tax year, including a limited partner or an indirect partner. Only the Service may select a limited partner or an indirect partner to be TMP. See IRM 22.214.171.124.5.3.6 for discussion of selection where largest profits interest rule is impracticable.
- When the partnership return is filed, it may designate a TMP in accordance with the instructions on the form.
- A properly selected TMP may designate a successor by filing certification of the successor with the Campus with which the partnership return is filed. Treas. Reg. 301.6231(a)(7)-1(d) describes the information to be included in the certification.
- The general partners with over 50 percent of the aggregate interests in partnership profits held by all general partners as of the close of the tax year may designate the TMP by filing a statement with the Campus with which the partnership return was filed. Treas. Reg. 301.6231(a)(7)-1(e) describes the information to be included in the statement. For purposes of the designation, all limited partnership interests held by general partners are included in determining the aggregate interests held by all general partners.
- Under limited circumstances all partners (including limited partners) with over 50 percent of the aggregate interest in partnership profits held by the partners as of the close of the tax year may designate the TMP by filing a statement with the Campus with which the partnership return was filed. Treas. Reg. 301.6231(a)(7)-1(f) describes the information to be included in the statement. This method may only be used if each general partner meets at least one of the following four circumstances:
- The general partner is dead, or if the general partner is an entity, it has been liquidated or dissolved, or
- The general partner has been adjudicated incompetent, or
- The general partner’s partnership items have become nonpartnership items under IRC 6231(b), or
- The general partner is no longer a partner in the partnership.
Caution:This provision does not permit the designation of a limited partner as TMP.
- The designation of the TMP is terminated under the following conditions (Treas. Reg. 301.6231(a)(7)-1(l)):
- The TMP dies
- The TMP is declared legally incompetent
- The TMP is liquidated or dissolved (if it is an entity)
- The TMP’s partnership items become nonpartnership items under IRC 6231(c) (relating to special enforcement areas - including bankruptcy). See Note below.
- A new TMP is designated by the partnership.
- The TMP resigns.
- A TMP designation by the partnership is revoked.
Note:Regarding IRM 126.96.36.199.5.3.4 (1)d, see IRC 6231(c) and Treas. Reg. 301.6231(c)-4, 301.6231(c)-5, 301.6231(c)-6, 301.6231(c)-7, and 301.6231(c)-8 for a description of the special enforcement areas and the timing of a conversion.
Also see Transpac Drilling Venture 1982-12 v. Commissioner, 147 F.3d 221 (2nd Cir. 1998). The court determined that a TMP under investigation for income tax crimes had a conflict of interest that automatically disqualified him from acting as the tax matters partner, even though the government had not sent the letter required by Temp. Treas. Reg. 301.6231(c)-5T.
A different conclusion was reached in Phillips v. Commissioner, 114 TC 115 (2000), aff’d 9th Cir. 2002, 272 F.3d 1172. The court determined that Treas. Reg. 301.6231(c)-5 was a valid regulation. The court found that the criminal investigation did not create a disabling conflict of interest that would require the Service to notify the TMP that his partnership items would be treated as nonpartnership items. See also Martinez, 564 F.3d 719, 752 (5th Cir. 2009).