26 U.S.C. § 6227 — Administrative adjustment request by

Page 3540 TITLE 26—INTERNAL REVENUE CODE § 6227 (C) Partnership payment of tax if elected out of subchapter In the case of a partnership which has elected the application of section 6221(b) with respect to the taxable year of the part- nership which includes the end of the re- viewed year of the audited partnership, this paragraph shall apply notwithstanding such election. (D) Audited partnership For purposes of this paragraph, the term ‘‘audited partnership’’ means, with respect to any partner described in subparagraph (A), the partnership in the chain of owner- ship originally electing the application of this section. (E) Treatment of trusts The Secretary shall prescribe such rules as may be necessary with respect to trusts which receive a statement under subsection (a)(2). (c) Penalties and interest (1) Penalties Notwithstanding subsections (a) and (b), any penalties, additions to tax, or additional amount shall be determined as provided under section 6221 and the partners of the partner- ship for the reviewed year shall be liable for any such penalty, addition to tax, or addi- tional amount. (2) Interest In the case of an imputed underpayment with respect to which the application of this section is elected, or which is described in sub- section (b)(4)(A)(ii)(I), interest shall be deter- mined— (A) at the partner level, (B) from the due date of the return for the taxable year to which the increase is attrib- utable (determined by taking into account any increases attributable to a change in tax attributes for a taxable year under sub- section (b)(2)), and (C) at the underpayment rate under sec- tion 6621(a)(2), determined by substituting ‘‘5 percentage points’’ for ‘‘3 percentage points’’ in subparagraph (B) thereof. (d) Judicial review For the time period within which a partner- ship may file a petition for a readjustment, see section 6234(a). (Added Pub. L. 114–74, title XI, § 1101(c)(1), Nov. 2, 2015, 129 Stat. 630; amended Pub. L. 114–113, div. Q, title IV, § 411(b)(1), Dec. 18, 2015, 129 Stat. 3122; Pub. L. 115–141, div. U, title II, §§ 201(c)(4), 204, 206(d), (e), Mar. 23, 2018, 132 Stat. 1173, 1176, 1178.) Editorial Notes PRIOR PROVISIONS A prior section 6226, added Pub. L. 97–248, title IV, § 402(a), Sept. 3, 1982, 96 Stat. 653; amended Pub. L. 97–448, title III, § 306(c)(1)(A), Jan. 12, 1983, 96 Stat. 2406; Pub. L. 102–572, title IX, § 902(b)(2), Oct. 29, 1992, 106 Stat. 4516; Pub. L. 105–34, title XII, §§ 1238(b)(1), 1239(b), 1240(a), Aug. 5, 1997, 111 Stat. 1026–1028, related to judi- cial review of final partnership administrative adjust- ments, prior to repeal by Pub. L. 114–74, title XI, § 1101(a), Nov. 2, 2015, 129 Stat. 625. AMENDMENTS 2018—Subsec. (a). Pub. L. 115–141, § 206(d), inserted ‘‘(and no assessment of tax, levy, or proceeding in any court for the collection of such underpayment shall be made against such partnership)’’ after ‘‘section 6225 shall not apply with respect to such underpayment’’ in concluding provisions. Subsec. (a)(2). Pub. L. 115–141, § 201(c)(4), substituted ‘‘any adjustment to a partnership-related item’’ for ‘‘any adjustment to income, gain, loss, deduction, or credit’’. Subsec. (b)(1). Pub. L. 115–141, § 206(e)(2), substituted ‘‘correction amounts’’ for ‘‘adjustment amounts’’. Pub. L. 115–141, § 206(e)(1), substituted ‘‘adjusted’’ for ‘‘increased’’. Pub. L. 115–141, § 204(b)(1), substituted ‘‘Except as pro- vided in paragraph (4), each partner’s’’ for ‘‘Each part- ner’s’’. Subsec. (b)(2). Pub. L. 115–141, § 206(e)(5), substituted ‘‘Correction amounts’’ for ‘‘Adjustment amounts’’ in heading. Pub. L. 115–141, § 206(e)(3), substituted ‘‘increase or de- crease’’ for ‘‘increase’’ in subpars. (A) and (B). Pub. L. 115–141, § 206(e)(2), substituted ‘‘correction amounts’’ for ‘‘adjustment amounts’’ in introductory provisions. Subsec. (b)(2)(A). Pub. L. 115–141, § 206(e)(4), sub- stituted ‘‘and’’ for ‘‘plus’’ at end. Subsec. (b)(4). Pub. L. 115–141, § 204(a), added par. (4). Subsec. (c)(2). Pub. L. 115–141, § 204(b)(2), inserted ‘‘or which is described in subsection (b)(4)(A)(ii)(I),’’ after ‘‘is elected,’’ in introductory provisions. 2015—Subsec. (d). Pub. L. 114–113 added subsec. (d). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2018 AMENDMENT Amendment by Pub. L. 115–141 effective as if included in section 1101 of Pub. L. 114–74, see section 207 of Pub. L. 115–141, set out as a note under section 6031 of this title. EFFECTIVE DATE OF 2015 AMENDMENT Amendment by Pub. L. 114–113 effective as if included in section 1101 of Pub. L. 114–74, see section 411(e) of Pub. L. 114–113, set out as a note under section 6031 of this title. EFFECTIVE DATE Section applicable to returns filed for partnership taxable years beginning after Dec. 31, 2017, with certain exceptions, see section 1101(g) of Pub. L. 114–74, set out as a note under section 6221 of this title. § 6227. Administrative adjustment request by partnership (a) In general A partnership may file a request for an admin- istrative adjustment in the amount of one or more partnership-related items for any partner- ship taxable year. (b) Adjustment Any such adjustment under subsection (a) shall be determined and taken into account for the partnership taxable year in which the ad- ministrative adjustment request is filed— (1) by the partnership under rules similar to the rules of section 6225 (other than para- graphs (2), (7), and (9) of subsection (c) thereof) for the partnership taxable year in which the administrative adjustment request is filed, or Page 3541 TITLE 26—INTERNAL REVENUE CODE § 6231 (2) by the partnership and partners under rules similar to the rules of section 6226 (de- termined without regard to the substitution described in subsection (c)(2)(C) thereof). In the case of an adjustment that would not re- sult in an imputed underpayment, paragraph (1) shall not apply and paragraph (2) shall apply with appropriate adjustments. (c) Period of limitations A partnership may not file such a request more than 3 years after the later of— (1) the date on which the partnership return for such year is filed, or (2) the last day for filing the partnership re- turn for such year (determined without regard to extensions). In no event may a partnership file such a re- quest after a notice of an administrative pro- ceeding with respect to the taxable year is mailed under section 6231. (d) Coordination with adjustments related to for- eign tax credits The Secretary shall issue regulations or other guidance which provide for the proper coordina- tion of this section and section 905(c). (Added Pub. L. 114–74, title XI, § 1101(c)(1), Nov. 2, 2015, 129 Stat. 631; amended Pub. L. 115–141, div. U, title II, §§ 201(c)(5), 206(f), (p)(2), (3), Mar. 23, 2018, 132 Stat. 1173, 1179, 1182.) Editorial Notes PRIOR PROVISIONS Prior sections 6227 to 6230 were repealed by Pub. L. 114–74, title XI, § 1101(a), (g), Nov. 2, 2015, 129 Stat. 625, 638, applicable to returns filed for partnership taxable years beginning after Dec. 31, 2017. Section 6227, added Pub. L. 97–248, title IV, § 402(a), Sept. 3, 1982, 96 Stat. 655; amended Pub. L. 105–34, title XII, §§ 1236(a), 1243(a), Aug. 5, 1997, 111 Stat. 1025, 1029; Pub. L. 107–147, title IV, § 417(19)(A), Mar. 9, 2002, 116 Stat. 56, related to administrative adjustment requests. Section 6228, added Pub. L. 97–248, title IV, § 402(a), Sept. 3, 1982, 96 Stat. 656; amended Pub. L. 97–448, title III, § 306(c)(1)(B), Jan. 12, 1983, 96 Stat. 2406; Pub. L. 102–572, title IX, § 902(b)(2), Oct. 29, 1992, 106 Stat. 4516; Pub. L. 107–147, title IV, § 417(19)(B), Mar. 9, 2002, 116 Stat. 56, related to judicial review where administra- tive adjustment request is not allowed in full. Section 6229, added Pub. L. 97–248, title IV, § 402(a), Sept. 3, 1982, 96 Stat. 659; amended Pub. L. 99–514, title XVIII, § 1875(d)(1), Oct. 22, 1986, 100 Stat. 2896; Pub. L. 100–647, title I, § 1018(o)(3), Nov. 10, 1988, 102 Stat. 3585; Pub. L. 105–34, title XII, §§ 1233(a)–(c), 1235(a), Aug. 5, 1997, 111 Stat. 1023, 1024; Pub. L. 107–147, title IV, § 416(d)(1)(B), Mar. 9, 2002, 116 Stat. 55; Pub. L. 111–147, title V, § 513(a)(2)(B), Mar. 18, 2010, 124 Stat. 112, related to period of limitations for making assessments. Section 6230, added Pub. L. 97–248, title IV, § 402(a), Sept. 3, 1982, 96 Stat. 660; amended Pub. L. 98–369, div. A, title VII, § 714(p)(2)(A), July 18, 1984, 98 Stat. 964; Pub. L. 99–514, title XVIII, § 1875(d)(2)(A), Oct. 22, 1986, 100 Stat. 2896; Pub. L. 100–647, title I, § 1018(o)(1), Nov. 10, 1988, 102 Stat. 3584; Pub. L. 102–572, title IX, § 902(b)(2), Oct. 29, 1992, 106 Stat. 4516; Pub. L. 105–34, title XII, §§ 1237(a)–(c)(1), 1238(b)(2)–(6), 1239(c)(1), Aug. 5, 1997, 111 Stat. 1025–1028; Pub. L. 105–206, title III, § 3201(e)(2), July 22, 1998, 112 Stat. 740; Pub. L. 110–172, § 11(a)(36), Dec. 29, 2007, 121 Stat. 2487, related to addi- tional administrative provisions. AMENDMENTS 2018—Subsec. (a). Pub. L. 115–141, § 201(c)(5), sub- stituted ‘‘partnership-related items’’ for ‘‘items of in- come, gain, loss, deduction, or credit of the partner- ship’’. Subsec. (b). Pub. L. 115–141, § 206(p)(2), substituted ‘‘is filed’’ for ‘‘is made’’ in introductory provisions and in par. (1). Subsec. (b)(1). Pub. L. 115–141, § 206(p)(3), which di- rected substitution of ‘‘paragraphs (2), (7), and (9)’’ for ‘‘paragraphs (2), (6), and (7)’’, was executed by making the substitution for ‘‘paragraphs (2), (6) and (7)’’ to re- flect the probable intent of Congress. Subsec. (d). Pub. L. 115–141, § 206(f), added subsec. (d). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2018 AMENDMENT Amendment by Pub. L. 115–141 effective as if included in section 1101 of Pub. L. 114–74, see section 207 of Pub. L. 115–141, set out as a note under section 6031 of this title. EFFECTIVE DATE Section applicable to returns filed for partnership taxable years beginning after Dec. 31, 2017, with certain exceptions, see section 1101(g) of Pub. L. 114–74, set out as a note under section 6221 of this title. PART III—PROCEDURE Sec. 6231. Notice of proceedings and adjustment. 6232. Assessment, collection, and payment. 6233. Interest and penalties. 6234. Judicial review of partnership adjustment. 6235. Period of limitations on making adjustments. Editorial Notes AMENDMENTS 2018—Pub. L. 115–141, div. U, title II, § 206(p)(11), Mar. 23, 2018, 132 Stat. 1183, amended part heading generally, substituting ‘‘PART III—PROCEDURE’’ for ‘‘PART 1— PROCEDURE’’. § 6231. Notice of proceedings and adjustment (a) In general The Secretary shall mail to the partnership and the partnership representative— (1) notice of any administrative proceeding initiated at the partnership level with respect to an adjustment of any partnership-related item for any partnership taxable year, or any partner’s distributive share thereof, (2) notice of any proposed partnership ad- justment resulting from such proceeding, and (3) notice of any final partnership adjust- ment resulting from such proceeding. Any notice of a final partnership adjustment shall be sufficient if mailed to the last known address of the partnership representative or the partnership (even if the partnership has termi- nated its existence). The first sentence shall apply to any proceeding with respect to an ad- ministrative adjustment request filed by a part- nership under section 6227. (b) Timing of notices (1) Notice of proposed partnership adjustment Any notice of a proposed partnership adjust- ment shall not be mailed later than the date determined under section 6235 (determined without regard to paragraphs (2) and (3) of sub- section (a) thereof). (2) Notice of final partnership adjustment (A) In general Except to the extent that the partnership elects to waive the application of this sub-