26 U.S.C. § 6232 — Assessment, collection, and payment

Page 3542 TITLE 26—INTERNAL REVENUE CODE § 6232 paragraph, any notice of a final partnership adjustment shall not be mailed earlier than 270 days after the date on which the notice of the proposed partnership adjustment is mailed. (B) Statute of limitations on adjustment For the period of limitations on making adjustments, see section 6235. (c) Further notices restricted If the Secretary mails a notice of a final part- nership adjustment to any partnership for any partnership taxable year and the partnership files a petition under section 6234 with respect to such notice, in the absence of a showing of fraud, malfeasance, or misrepresentation of a material fact, the Secretary shall not mail an- other such notice to such partnership with re- spect to such taxable year. (d) Authority to rescind notice with partnership consent The Secretary may, with the consent of the partnership, rescind any notice of a partnership adjustment mailed to such partnership. Any no- tice so rescinded shall not be treated as a notice of a partnership adjustment for purposes of this subchapter, and the taxpayer shall have no right to bring a proceeding under section 6234 with re- spect to such notice. (Added Pub. L. 114–74, title XI, § 1101(c)(1), Nov. 2, 2015, 129 Stat. 632; amended Pub. L. 115–141, div. U, title II, §§ 201(c)(6), 206(h), Mar. 23, 2018, 132 Stat. 1173, 1179.) Editorial Notes PRIOR PROVISIONS A prior section 6231, added Pub. L. 97–248, title IV, § 402(a), Sept. 3, 1982, 96 Stat. 663; amended Pub. L. 98–369, div. A, title VII, § 714(p)(2)(B)–(D), (I), July 18, 1984, 98 Stat. 964, 965; Pub. L. 105–34, title XI, § 1141(b), title XII, §§ 1232(a), 1234(a), Aug. 5, 1997, 111 Stat. 981, 1023, 1024; Pub. L. 105–206, title III, § 3507(a), July 22, 1998, 112 Stat. 772; Pub. L. 107–147, title IV, §§ 416(d)(1)(C), 417(19)(C), Mar. 9, 2002, 116 Stat. 55, 57, de- fined terms for purposes of this subchapter and listed special rules for partnership items, 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(h)(2), sub- stituted ‘‘Any notice of a final partnership adjust- ment’’ for ‘‘Any notice of a final partnership adjust- ment shall not be mailed earlier than 270 days after the date on which the notice of the proposed partnership adjustment is mailed. Such notices’’ in concluding pro- visions. Subsec. (a)(1). Pub. L. 115–141, § 201(c)(6), substituted ‘‘any partnership-related item for any partnership tax- able year’’ for ‘‘any item of income, gain, loss, deduc- tion, or credit of a partnership for a partnership tax- able year’’. Subsecs. (b) to (d). Pub. L. 115–141, § 206(h)(1), added subsec. (b) and redesignated former subsecs. (b) and (c) as (c) and (d), respectively. 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. SPECIAL RULE FOR CERTAIN INTERNATIONAL SATELLITE PARTNERSHIPS Pub. L. 97–248, title IV, § 406, Sept. 3, 1982, 96 Stat. 670, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘‘[Former] Subchapter C of chapter 63 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (relating to tax treatment of partnership items), section 6031 of such Code (relating to returns of part- nership income), and section 6046A of such Code (relat- ing to returns as to interest in foreign partnerships) shall not apply to the International Telecommuni- cations Satellite Organization, the International Mari- time Satellite Organization, and any organization which is a successor of either of such organizations.’’ § 6232. Assessment, collection, and payment (a) In general Any imputed underpayment shall be assessed and collected in the same manner as if it were a tax imposed for the adjustment year by sub- title A, except that— (1) subchapter B of chapter 63 shall not apply, and (2) in the case of an administrative adjust- ment request to which section 6227(b)(1) ap- plies, the underpayment shall be paid and may be assessed when the request is filed. (b) Limitation on assessment Except as otherwise provided in this subtitle (other than subchapter B of this chapter), no as- sessment of an imputed underpayment may be made (and no levy or proceeding in any court for the collection of any amount resulting from such adjustment may be made, begun or pros- ecuted) before— (1) the close of the 90th day after the day on which a notice of a final partnership adjust- ment was mailed, and (2) if a petition is filed under section 6234 with respect to such notice, the decision of the court has become final. The preceding sentence shall not apply in the case of a specified similar amount (as defined in subsection (f)(2)). (c) Premature action may be enjoined Notwithstanding section 7421(a), any action which violates subsection (b) may be enjoined in the proper court, including the Tax Court. The Tax Court shall have no jurisdiction to enjoin any action under this subsection unless a timely petition has been filed under section 6234 and then only in respect of the adjustments that are the subject of such petition. (d) Exceptions to restrictions on adjustments (1) Adjustments arising out of math or clerical errors (A) In general If the partnership is notified that, on ac- count of a mathematical or clerical error ap- pearing on the partnership return, an adjust- ment to an item is required, rules similar to the rules of paragraphs (1) and (2) of section 6213(b) shall apply to such adjustment. Page 3543 TITLE 26—INTERNAL REVENUE CODE § 6232 (B) Special rule If a partnership is a partner in another partnership, any adjustment on account of such partnership’s failure to comply with the requirements of section 6222(a) with re- spect to its interest in such other partner- ship shall be treated as an adjustment re- ferred to in subparagraph (A), except that paragraph (2) of section 6213(b) shall not apply to such adjustment. (2) Partnership may waive restrictions The partnership may at any time (whether or not any notice of partnership adjustment has been issued), by a signed notice in writing filed with the Secretary, waive the restric- tions provided in subsection (b) on the making of any partnership adjustment. (e) Limit where no proceeding begun If no proceeding under section 6234 is begun with respect to any notice of a final partnership adjustment during the 90-day period described in subsection (b), the amount for which the part- nership is liable under section 6225 shall not ex- ceed the amount determined in accordance with such notice. (f) Failure to pay imputed underpayment (1) In general If any amount of any imputed underpayment to which section 6225 applies or any specified similar amount (or any interest or penalties with respect to any such amount) has not been paid by the date which is 10 days after the date on which the Secretary provides notice and de- mand for such payment— (A) section 6621(a)(2)(B) shall be applied by substituting ‘‘5 percentage points’’ for ‘‘3 percentage points’’ with respect to such amount, and (B) the Secretary may assess upon each partner of the partnership (determined as of the close of the adjustment year or, if the partnership has ceased to exist as of such time, the former partners of the partnership as determined for purposes of section 6241(7)) a tax equal to such partner’s proportionate share of such amount (including any such in- terest or penalties, determined after applica- tion of subparagraph (A)). (2) Specified similar amount For purposes of this subsection, the term ‘‘specified similar amount’’ means— (A) the amount described in subclause (II) of section 6226(b)(4)(A)(ii) (including any failure to satisfy the requirement of sub- clause (I) of such section which is treated as a failure to pay such amount under section 6651(i)), and (B) any amount assessed under paragraph (1)(B) upon a partner which is a partnership. (3) Proportionate share For purposes of paragraph (1), a partner’s proportionate share is such percentage as the Secretary may determine on the basis of such partner’s distributive share. The Secretary shall make determinations under the pre- ceding sentence such that the aggregate pro- portionate shares so determined total 100 per- cent. (4) Coordination with partnership liability The liability of the partnership for any amount with respect to which a partner is made liable under paragraph (1) shall be re- duced upon payment by the partner of such amount. Paragraph (1)(B) shall not apply with respect to any amount after the date on which such amount is paid by the partnership. (5) S corporations For purposes of this subsection, an S cor- poration and its shareholders shall be treated in the same manner as a partnership and its partners. (6) Rules related to assessment and collection (A) Deficiency procedures not applicable Subchapter B shall not apply to any as- sessment or collection under this paragraph. (B) Limitation on assessment Except as otherwise provided in this sub- title, no assessment may be made (or pro- ceeding in court begun without assessment) with respect to any partner with respect to an amount under paragraph (1) after the date which is 2 years after the date on which the Secretary provides the notice and de- mand referred to in paragraph (1) with re- spect to such amount. (Added Pub. L. 114–74, title XI, § 1101(c)(1), Nov. 2, 2015, 129 Stat. 632; amended Pub. L. 115–141, div. U, title II, §§ 205(a), 206(g), (p)(4)–(6), Mar. 23, 2018, 132 Stat. 1177, 1179, 1182.) Editorial Notes PRIOR PROVISIONS A prior section 6232, added Pub. L. 97–248, title IV, § 402(a), Sept. 3, 1982, 96 Stat. 666, related to extension of subchapter provisions, respecting tax treatment of partnership items, to windfall profit tax, prior to repeal by Pub. L. 100–418, title I, § 1941(b)(1), Aug. 23, 1988, 102 Stat. 1323. AMENDMENTS 2018—Subsec. (a). Pub. L. 115–141, § 206(g)(1), sub- stituted ‘‘except that—’’ for ‘‘except that in the case of an administrative adjustment request to which section 6227(b)(1) applies, the underpayment shall be paid when the request is filed.’’ and added pars. (1) and (2). Subsec. (b). Pub. L. 115–141, § 206(p)(4), substituted ‘‘this subtitle (other than subchapter B of this chap- ter)’’ for ‘‘this chapter’’ in introductory provisions. Pub. L. 115–141, § 206(g)(2), substituted ‘‘assessment of an imputed underpayment’’ for ‘‘assessment of a defi- ciency’’ in introductory provisions and inserted con- cluding provisions. Subsec. (d)(1)(A). Pub. L. 115–141, § 206(p)(5), sub- stituted ‘‘an item’’ for ‘‘a item’’. Subsec. (e). Pub. L. 115–141, § 206(p)(6), struck out ‘‘thereof’’ after ‘‘subsection (b)’’. Subsec. (f). Pub. L. 115–141, § 205(a), added subsec. (f). 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 Page 3544 TITLE 26—INTERNAL REVENUE CODE § 6233 exceptions, see section 1101(g) of Pub. L. 114–74, set out as a note under section 6221 of this title. § 6233. Interest and penalties (a) Interest and penalties determined from re- viewed year (1) In general Except to the extent provided in section 6226(c), in the case of a partnership adjustment for a reviewed year— (A) interest shall be computed under para- graph (2), and (B) the partnership shall be liable for any penalty, addition to tax, or additional amount as provided in paragraph (3). (2) Determination of amount of interest 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 ad- justment 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 ad- justments required for partnership taxable years after the reviewed year and before the adjustment year by reason of such partnership adjustment. (3) Penalties Any penalty, addition to tax, or additional amount shall be determined at the partnership level as if such partnership had been an indi- vidual subject to tax under chapter 1 for the reviewed year and the imputed underpayment were an actual underpayment (or understate- ment) for such year. (b) Interest and penalties with respect to adjust- ment year return (1) In general In the case of any failure to pay an imputed underpayment on the date prescribed therefor, the partnership shall be liable— (A) for interest as determined under para- graph (2), and (B) for any penalty, addition to tax, or ad- ditional amount as determined under para- graph (3). (2) Interest Interest determined under this paragraph is the interest that would be determined by treating the imputed underpayment as an un- derpayment of tax imposed in the adjustment year. (3) Penalties Penalties, additions to tax, or additional amounts determined under this paragraph are the penalties, additions to tax, or additional amounts that would be determined— (A) by applying section 6651(a)(2) to such failure to pay, and (B) by treating the imputed underpayment as an underpayment of tax for purposes of part II of subchapter A of chapter 68. (c) Deposit to suspend interest For rules allowing deposits to suspend running of interest on potential underpayments, see sec- tion 6603. (Added Pub. L. 114–74, title XI, § 1101(c)(1), Nov. 2, 2015, 129 Stat. 633; amended Pub. L. 115–141, div. U, title II, § 206(i), Mar. 23, 2018, 132 Stat. 1180.) Editorial Notes PRIOR PROVISIONS A prior section 6233, added Pub. L. 98–369, div. A, title VII, § 714(p)(1), July 18, 1984, 98 Stat. 964; amended Pub. L. 104–188, title I, § 1307(c)(3)(B), Aug. 20, 1996, 110 Stat. 1782, related to extension to entities filing partnership returns, prior to repeal by Pub. L. 114–74, title XI, § 1101(a), Nov. 2, 2015, 129 Stat. 625. AMENDMENTS 2018—Subsec. (c). Pub. L. 115–141 added subsec. (c). 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. § 6234. Judicial review of partnership adjustment (a) In general Within 90 days after the date on which a no- tice of a final partnership adjustment is mailed under section 6231 with respect to any partner- ship taxable year, the partnership may file a pe- tition for a readjustment for such taxable year with— (1) the Tax Court, (2) the district court of the United States for the district in which the partnership’s prin- cipal place of business is located, or (3) the Court of Federal Claims. (b) Jurisdictional requirement for bringing ac- tion in district court or Court of Federal Claims (1) In general A readjustment petition under this section may be filed in a district court of the United States or the Court of Federal Claims only if the partnership filing the petition deposits with the Secretary, on or before the date the petition is filed, the amount of (as of the date of the filing of the petition) the imputed un- derpayment, penalties, additions to tax, and additional amounts with respect to such im- puted underpayment if the partnership adjust- ment was made as provided by the notice of final partnership adjustment. The court may by order provide that the jurisdictional re- quirements of this paragraph are satisfied where there has been a good faith attempt to satisfy such requirement and any shortfall of the amount required to be deposited is timely corrected. (2) Interest payable Any amount deposited under paragraph (1), while deposited, shall not be treated as a pay-