Opinion ID: 6321959
Heading Depth: 2
Heading Rank: 1

Heading: Keene-Stevens petitioned the Tax Court for a

Text: redetermination of 2006 and 2008 federal income tax deficiencies for the partnership SNJ Limited (“SNJ”). The Tax Court dismissed because appellants failed to petition within 150 days of November 1, 2017, when the Commissioner of Internal Revenue (“Commissioner”) issued the first Notices of Final Partnership Administrative Adjustment (“FPAA”). Appellants argue that their petition was timely because Internal Revenue Code (“I.R.C.”) § 6223(f) barred the Commissioner from issuing more than one FPAA pertaining to a partnership’s taxable year, and the FPAA issued by the Commissioner on March 6, 2018 was the only valid FPAA. Appellants also argue that I.R.C. § 6226’s filing deadline is not jurisdictional, and that they are entitled to equitable tolling. We have jurisdiction under 26 U.S.C. § 7482(a)(1) and affirm. 1
The Tax Equity and Fiscal Responsibility Act (“TEFRA”), Pub. L. No. 97–248, § 402, 96 Stat. 324, 648 (1982) required that the tax treatment of partnership items be determined in partnership-level proceedings that are generally binding on all partners. A partnership may identify a tax matters partner (“TMP”) who will represent the 1 Although appellants make a due process argument in their reply brief, this argument is deemed waived because it was not raised in the opening brief. See Smith v. Marsh, 194 F.3d 1045, 1052 (9th Cir. 1999) (“[O]n appeal, arguments not raised by a party in its opening brief are deemed waived.”). SNJ LIMITED V. CIR 7 partnership in these proceedings. See 26 C.F.R. § 301.6231(a)(7)–1; United States v. Woods, 571 U.S. 31, 39 (2013). Although the Bipartisan Budget Act of 2015, Pub. L. No. 114–74, 129 Stat. 584 (2015) repealed TEFRA effective after December 31, 2017, TEFRA’s provisions govern here because this case concerns SNJ’s partnership returns for 2006 and 2008. 2 The Commissioner must mail an FPAA to the TMP and to other partners entitled to notice. I.R.C. § 6223(a)(2). If the Commissioner makes adjustments to partnership items with which the partnership disagrees, the TMP can petition the Tax Court, federal district court, or the Court of Federal Claims for readjustment of the partnership items within 90 days after the FPAA is mailed to the TMP. I.R.C. § 6226(a). If the TMP does not timely file, non-TMP partners have an additional 60 days to file such a petition. I.R.C. § 6226(b)(1). On November 1, 2017, the Commissioner mailed FPAAs for 2006 and 2008, addressed to the “Tax Matters Partner of SNJ, LTD.” Each FPAA was sent to two addresses: 2090 Troon Dr., Henderson, NV (“Troon address”) and 3980 S. Eastern Ave., Las Vegas, NV (“Eastern address”). On December 18, 2017, the Commissioner mailed the same set of FPAAs to the Troon address. 3 Although some of the 2 To avoid confusion, this Opinion cites Title 26 of the United States Code prior to TEFRA’s repeal as “I.R.C.” and Title 26 after the repeal as “26 U.S.C.” 3 Although the Commissioner claims that “[o]n December 18, 2017, the Commissioner issued FPAAs . . . to the partners other than the tax matters partner by certified mail to appellants at both the Eastern Ave. and the Troon Dr. addresses,” the record shows that these FPAAs were mailed only to the Troon address. 8 SNJ LIMITED V. CIR December 18, 2017 FPAAs were addressed to “RNS FAMILY IRREVOCABLE TR[UST]” instead of SNJ, the December 18, 2017 FPAAs were addressed to Ritchie Stevens or Ritchie Stevens and “J A Keen-Stevens” (in apparent reference to appellant Julie A. Keene-Stevens). The schedules of adjustments attached to the 2017 FPAAs sometimes referred to “RNS, LTD” as the partnership but listed SNJ’s taxpayer identification number. On February 1, 2018, the Commissioner sent a second set of FPAAs, addressed to SNJ’s TMP, to both addresses. On March 6, 2018, the Commissioner sent the 2018 FPAAs to the Eastern address, one set addressed to Ritchie Stevens and another set addressed to both Ritchie Stevens and J A Keen-Stevens. The only material difference between the 2017 FPAAs and the 2018 FPAAs is that the 2018 FPAAs corrected the name of the partnership on the schedules of adjustments attached to the FPAAs. On June 7, 2018, appellants filed a petition with the Tax Court requesting a redetermination of the SNJ deficiencies, with the March 6, 2018 FPAAs attached to the petition. The Commissioner moved to dismiss, arguing that the Tax Court lacked jurisdiction pursuant to I.R.C. § 6226 because appellants failed to petition within 150 days of November 1, 2017, the date when the Commissioner issued the first FPAAs. Appellants argued that “any notice in regard to partnership determinations was invalid from the inception” because, among other reasons, the FPAAs were sent to the wrong addresses. Appellants also argued that the Commissioner “had every opportunity at trial . . . on December 5, 2017, to ask about the[ir preferred] address . . . while Petitioner Ritchie N. Stevens[] was a witness” in other proceedings before the Tax Court. Appellants never claimed that I.R.C. § 6226 was not jurisdictional or that they were entitled to equitable tolling. SNJ LIMITED V. CIR 9 The Tax Court began its analysis with the FPAAs. “[I]f the November 2017 FPAAs were valid, the February 2018 FPAAs were not,” and “the November 2017 FPAAs were not invalid . . . .” Although appellants had never filed SNJ’s signed partnership returns for 2006 and 2008, they sent the Commissioner unsigned returns for 2006 and 2008 respectively in 2014 and 2016, listing the Troon address as the partnership address. The Tax Court held that, although I.R.C. § 6223(c) required the Commissioner to mail any FPAA to the addresses provided in the partnership’s returns, appellants had not provided signed returns, and the applicable regulations permitted the Commissioner to “use the information provided on the unsigned partnership returns . . . in determining where to mail the FPAAs for the years in issue.” Appellants claimed that notices sent to the Troon address were invalid because they had not lived there for “a great number of years.” As for the Eastern address, appellants claimed that it was “not the address of any partnership . . . but . . . the address of the ‘medical facility’ in Las Vegas.” Appellants also noted that the notices addressed to the TMP at the Eastern address were not directed to any named person. The court stated that it “accepted the validity of FPAAs addressed generically to a partnership’s [TMP] that do not specifically name that partner,” citing Chomp Assocs. v. Comm’r, 91 T.C. 1069, 1073 (1988) (“[S]ection 6223 does not require that a specific TMP be enumerated on the FPAA.”). The court also found that, despite appellants’ claim that the Eastern address was a medical facility, appellants attached to their petition the 2018 FPAA sent to the Eastern address, indicating that they could receive mail at the Eastern address. 10 SNJ LIMITED V. CIR Because the petition was filed more than 150 days after the Commissioner mailed the only valid FPAAs, the Tax Court dismissed the case for lack of jurisdiction (titling its order, “Order of Dismissal For Lack of Jurisdiction”): “Leaving aside the defects in the form of petitioners’ petition, because they did not file it within 150 days after the date on which respondent mailed to SNJ’s tax matters partner the only valid FPAAs covering the taxable years in issue, their petition was untimely. Consequently, we do not have jurisdiction over the present case.” Appellants moved to reconsider, arguing that the Commissioner knew or should have known to send the FPAAs to an address in Park City, Utah or to SNJ’s resident agent in Nevada. The motion to reconsider disclaimed the statement in the petition that the Troon address was the appellants’ legal residence “at all times herein,” and “apologized to th[e] court for any confusion caused thereby.” Appellants also claimed that the Commissioner had violated a waiting period of 270 days required by 26 U.S.C. § 6231(a)(3) before sending the FPAAs. The court denied the motion, finding that appellants failed to “establish[] that they provided a Park City address to respondent in any manner.” The court also rejected the Nevada “resident agent” and “waiting period” claims, because those claims relied on 26 U.S.C. §§ 6223, 6231 as amended in 2015 instead of I.R.C. § 6223, which applied to SNJ’s partnership returns for 2006 and 2008.
“Conclusions of law, including the Tax Court’s interpretation of the Internal Revenue Code, are reviewed de novo. Whether the Tax Court has subject matter jurisdiction is a question of law and thus reviewed de novo.” Adkison v. Comm’r, 592 F.3d 1050, 1052 (9th Cir. 2010) (citation SNJ LIMITED V. CIR 11 omitted). “We review the Tax Court’s factual determinations . . . for clear error.” Est. of Trompeter v. Comm’r, 279 F.3d 767, 770 (9th Cir. 2002). “Under the clear error standard, we will reverse the tax court only when we are ‘left with the definite and firm conviction’” that the Tax Court’s factual findings were wrong. Maciel v. Comm’r, 489 F.3d 1018, 1027 (9th Cir. 2007) (citation omitted). To have such a definite and firm conviction, we must find that the Tax Court’s conclusion was “(1) illogical, (2) implausible, or (3) without support in inferences that may be drawn from the facts in the record.” United States v. Hinkson, 585 F.3d 1247, 1262 (9th Cir. 2009) (en banc).
A. Appellants first argue that the 2017 FPAAs are invalid because they were sent to the wrong addresses. Appellants claim that the Troon address is incorrect because, while they lived there in 2006 and 2008, they no longer lived there in 2017 and 2018. But appellants’ petition stated that they “at all times herein had a legal residence” at the Troon address, and SNJ’s unsigned partnership returns for 2006 and 2008, which were sent in 2014 and 2016, listed the Troon address. As the Tax Court found, “the Commissioner [was] allowed, though not required” to use information provided on the unsigned returns, even though the unsigned returns “did not comply with” the applicable regulations. See 26 C.F.R. § 301.6223(c)–1. Appellants’ claim that the Troon address was invalid lacks merit. Appellants argue that the Eastern address is invalid with respect to the 2017 FPAAs but not the 2018 FPAAs. While appellants state that “[t]he March 6, 2018 FPAA Notice [sent to the Eastern address] was sent properly,” they argue that 12 SNJ LIMITED V. CIR the FPAA sent to the same address on November 1, 2017 was invalid because it was addressed only to the “TMP” and not to a named person. Appellants allege that the Eastern address is a medical facility where SNJ “does not have an office” and, “[w]ithout a name to connect SNJ to a person . . . at the medical office, neither the postal carrier nor anyone opening up the mail [there] would have anyway [sic] to deliver the November 1, 2017 FPAA to Mr. or Ms. Stevens.” But Chomp explained that FPAAs need only provide “‘minimal’ or adequate notice” because “[t]he concept of a TMP is . . . part of the partnership audit procedures which are to provide efficiency, convenience and economy to the tax system.” 91 T.C. at 1074. Chomp held that “section 6223 does not require that a specific TMP be enumerated on the FPAA” and an FPAA addressed to a TMP “provided adequate, or ‘minimal’ notice, as contemplated under [§] 6223(a).” Id. at 1073–74. Chomp rejected the contention that minimal notice “requires at the very least an identification of the taxpayer” and that the Commissioner “failed to use information that he could ascertain readily from his records” in that case, because he “mailed the FPAA . . . to all requisite partners . . . at their known addresses, as provided by the partnership.” Id. at 1074–75. In this case, appellants do not dispute that they “used [the Eastern] address in their filings in another case involving their individual income tax liability.” “In addition to the information on the partnership return and that supplied on statements filed under this section, the Internal Revenue Service may use other information in its possession . . . in administering subchapter C of chapter 63 of the Internal Revenue Code.” 26 C.F.R. § 301.6223(c)–1(f). Because the Commissioner sent the November 1, 2017 FPAAs addressed SNJ LIMITED V. CIR 13 to SNJ’s TMP to the address given by appellants, the Tax Court properly held that “the November 2017 FPAAs were not invalid by reason of being improperly addressed.”