26 U.S.C. § 6234 — Judicial review of partnership adjustment

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- Page 3545 TITLE 26—INTERNAL REVENUE CODE § 6235 1 See References in Text note below. ment of tax for purposes of this title (other than chapter 67). (c) Scope of judicial review A court with which a petition is filed in ac- cordance with this section shall have jurisdic- tion to determine all partnership-related items for the partnership taxable year to which the notice of final partnership adjustment relates, the proper allocation of such items among the partners, and the applicability of any penalty, addition to tax, or additional amount for which the partnership may be liable under this sub- chapter. (d) Determination of court reviewable Any determination by a court under this sec- tion shall have the force and effect of a decision of the Tax Court or a final judgment or decree of the district court or the Court of Federal Claims, as the case may be, and shall be review- able as such. The date of any such determina- tion shall be treated as being the date of the court’s order entering the decision. (e) Effect of decision dismissing action If an action brought under this section is dis- missed other than by reason of a rescission under section 6231(c),1 the decision of the court dismissing the action shall be considered as its decision that the notice of final partnership ad- justment is correct, and an appropriate order shall be entered in the records of the court. (Added Pub. L. 114–74, title XI, § 1101(c)(1), Nov. 2, 2015, 129 Stat. 634; amended Pub. L. 114–113, div. Q, title IV, § 411(b)(2), (3), Dec. 18, 2015, 129 Stat. 3122; Pub. L. 115–141, div. U, title II, §§ 201(c)(7), 206(j), Mar. 23, 2018, 132 Stat. 1173, 1180.) Editorial Notes REFERENCES IN TEXT Section 6231(c), referred to in subsec. (e), was redesig- nated section 6231(d) by Pub. L. 115–141, div. U, title II, § 206(h)(1), Mar. 23, 2018, 132 Stat. 1179. PRIOR PROVISIONS A prior section 6234, added Pub. L. 105–34, title XII, § 1231(a), Aug. 5, 1997, 111 Stat. 1020; amended Pub. L. 107–147, title IV, § 416(d)(1)(D), Mar. 9, 2002, 116 Stat. 55, related to declaratory judgment relating to treatment of items other than partnership items with respect to an oversheltered return, prior to repeal by Pub. L. 114–74, title XI, § 1101(a), Nov. 2, 2015, 129 Stat. 625. AMENDMENTS 2018—Subsec. (b)(1). Pub. L. 115–141, § 206(j), sub- stituted ‘‘the amount of (as of the date of the filing of the petition) the imputed underpayment, penalties, ad- ditions to tax, and additional amounts with respect to such imputed underpayment’’ for ‘‘the amount of the imputed underpayment (as of the date of the filing of the petition)’’. Subsec. (c). Pub. L. 115–141, § 201(c)(7), substituted ‘‘all partnership-related items’’ for ‘‘all items of income, gain, loss, deduction, or credit of the partnership’’. 2015—Pub. L. 114–113 substituted ‘‘Court of Federal Claims’’ for ‘‘Claims Court’’ wherever appearing. 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. § 6235. Period of limitations on making adjust- ments (a) In general Except as otherwise provided in this section or section 905(c), no adjustment under this sub- chapter for any partnership taxable year may be made after the later of— (1) the date which is 3 years after the latest of— (A) the date on which the partnership re- turn for such taxable year was filed, (B) the return due date for the taxable year, or (C) the date on which the partnership filed an administrative adjustment request with respect to such year under section 6227, or (2) in the case of any modification of an im- puted underpayment under section 6225(c), the date that is 270 days (plus the number of days of any extension consented to by the Sec- retary under paragraph (7) thereof) after the date on which everything required to be sub- mitted to the Secretary pursuant to such sec- tion is so submitted, or (3) in the case of any notice of a proposed partnership adjustment under section 6231(a)(2), the date that is 330 days (plus the number of days of any extension consented to by the Secretary under section 6225(c)(7)) after the date of such notice. (b) Extension by agreement The period described in subsection (a) (includ- ing an extension period under this subsection) may be extended by an agreement entered into by the Secretary and the partnership before the expiration of such period. (c) Special rule in case of fraud, etc. (1) False return In the case of a false or fraudulent partner- ship return with intent to evade tax, the ad- justment may be made at any time. (2) Substantial omission of income If any partnership omits from gross income an amount properly includible therein and such amount is described in subparagraph (A) or (C) of section 6501(e)(1), subsection (a) shall be applied by substituting ‘‘6 years’’ for ‘‘3 years’’. (3) No return In the case of a failure by a partnership to file a return for any taxable year, the adjust- ment may be made at any time. (4) Return filed by Secretary For purposes of this section, a return exe- cuted by the Secretary under subsection (b) of