Opinion ID: 781368
Heading Depth: 2
Heading Rank: 1

Heading: The Disclosure Was in an Administrative Proceeding

Text: 17 Abelein argues that this was an audit and under § 6103 audits are not administrative proceedings. The argument has some plausibility; it has split the circuits. The Tenth Circuit has opined that audits are administrative proceedings. See First W. Gov't Sec., Inc. v. United States, 796 F.2d 356, 360-61 (10th Cir.1986); see also Norman E. Duquette, Inc. v. Comm'r, 110 F.Supp.2d 16, 20 (D.D.C.2000). The Fourth Circuit has issued a contrary opinion. See Mallas v. United States, 993 F.2d 1111, 1122-24 (4th Cir.1993). We have had the opportunity to decide cases which have subtended that issue, but have done so on other grounds. We have looked, instead, to the 26 U.S.C. § 7431(b)(1) good faith exception. See Ingham, 167 F.3d at 1245-46; McDonald v. United States, 102 F.3d 1009, 1011 (9th Cir.1996). In another context, we have referred to audits as administrative proceedings. See Delpit v. Comm'r, 18 F.3d 768, 770, 772 & n. 3 (9th Cir.1994). Thus, it is a rather interesting debate, but we need not engage in the full scale battle over whether audits are always administrative proceedings. We need only address ourselves to the skirmish before us — was the proceeding at hand an administrative proceeding? We think it pellucid that it was. 18 The proceeding we deal with here was the very special kind that Congress created for, among other things, the purpose of achieving equity for taxpayers and the government when partnerships are involved in tax matters. That was a part of the Tax Equity and Financial Responsibility Act of 1982, Pub.L. No. 97-248, 96 Stat. 324 (TEFRA). Under TEFRA, the determination of partnership items is made at the partnership level and binds the individual partners thereafter. Because that is true, Congress provided that: 19 The Secretary shall mail to each partner whose name and address is furnished to the Secretary notice of — 20 (1) the beginning of an administrative proceeding at the partnership level with respect to a partnership item, and 21 (2) the final partnership administrative adjustment resulting from any such proceeding.... 22 26 U.S.C. § 6223(a); see also id. § 6224(a) (partner can participate in administrative proceedings). 23 What Abelein attacks is the giving of the very notice that § 6223(a)(2) requires the Secretary to give to partners. Setting aside for a moment the issue of whether those given notice really were partners, 2 and focusing on the remainder of the section, it is plain that this was an administrative proceeding. Congress said so. The regulations, not surprisingly, have carried out that concept. See, e.g., Temp. Treas. Reg. § 301.6223(a)-1T(b) (referring to a notice sent by the IRS to the tax matters partner as a notice of the beginning of an administrative proceeding); id. § 301.6223(a)-2T (specifying the procedure for the IRS to withdraw notice of the beginning of an administrative proceeding); id. § 301.6224(a)-1T (stating that all partners, including indirect partners, have the right to participate in any phase of the administrative proceeding). 24 All of the above being so, it would be at least middling strange were we to hold that issuance of the FPAA was not part of an administrative proceeding within the meaning of 26 U.S.C. § 6103(h)(4). It would overlook the normal rule of statutory construction that identical words used in different parts of the same act are intended to have the same meaning. Comm'r v. Lundy, 516 U.S. 235, 250, 116 S.Ct. 647, 655, 133 L.Ed.2d 611 (1996) (internal quotation marks omitted); see also Montero-Martinez v. Ashcroft, 277 F.3d 1137, 1142 (9th Cir.2002). Applying that rule here would not lead to an absurd or glaringly unjust result. Taylor v. Dir., Office of Workers Comp. Programs, 201 F.3d 1234, 1240(9th Cir.2000). In fact, the contrary is the case. Were we to hold that 26 U.S.C. § 6223(a)(2) directs the sending of an FPAA notice at the close of the administrative proceeding, but that the disclosure is improper because it is not in an administrative proceeding under 26 U.S.C. § 6103(h)(4), that would suggest that either we, or the tax laws, are even more anserine than some commentators have suggested. 25 In fine, the FPAAs were sent out as part of an administrative proceeding within the meaning of 26 U.S.C. § 6103(h)(4).