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Tax – partnerships — statute of limitations

United States Court of Appeals For the Seventh Circuit


Tax – partnerships — statute of limitations

Statute of limitations challenges cannot be raised in partner-level proceedings.

“Having rejected the taxpayers’ invitation to interpret §6229 and §6501 in the manner they propose, Kaplan’s logic remains sound. Because the determination of whether a valid written agreement exists will affect the entire partnership’s bottom-line— i.e., because it is a ‘legal and factual determination[] that underlie[s] the determination’ of various balance-sheet items for tax purposes, 26 C.F.R. §301.6231(a)(3)–1(b)—this determination meets the statutory and regulatory definitions of a partnership item. See 26 U.S.C. §6231(a)(3); 26 C.F.R. §301.6231(a)(3)–1(b). In making this determination, we note that our practice is consistent with that of several of our sister circuits, which have determined that statute-of-limitations challenges cannot be raised in partner-level proceedings under the Tax Equity and Fiscal Responsibility Act (TEFRA) of 1982, 26 U.S.C. §§6221–6234. See, e.g., Keener, 551 F.3d at 1364 (“To remain consistent with [TEFRA’s] structure, the limitations claim … should not be litigated in a partner-level proceeding because it affects the partnership as a whole.’); Weiner v. United States, 389 F.3d 152, 156 (5th Cir. 2004); Davenport Recycling Assocs. v. Comm’r, 220 F.3d 1255, 1260 (11th Cir. 2000); Chimblo v. Comm’r, 177 F.3d 119, 125 (2d Cir. 1999); Williams v. United States, 165 F.3d 30 (6th Cir. 1998) (unpublished table decision). Because the taxpayers’ claims in this part of its appeal are attributable to a partnership item, courts lack subject-matter jurisdiction to hear them under §7422(h). Accordingly, we affirm the district court’s dismissal for want of jurisdiction.”


12-1212 Acute Care Specialists II v. U.S.

Appeal from the United States District Court for the Northern District of Illinois, Kennelly, J., Tinder, J.

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