Court Opinion

ID: 812607
Source: CourtListenerOpinion
Date Created: 2012-11-27 20:21:23+00
Date Added: 2024-06-11T12:59:51.488788
License: Public Domain

Case: 12-5081     Document: 20    Page: 1    Filed: 11/27/2012

          NOTE:   This order is nonprecedential.

  mtnlteb ~tate~ 551 F.3d 1358 (Fed. Cir. 2009) and Prati v.
Case: 12-5081     Document: 20     Page: 2    Filed: 11/27/2012

RICHARD DAHLBERG v. US                                     2

United States, 603 F.3d 1301 (Fed. Cir. 2010). The gov-
ernment's motion is opposed by the taxpayers.
    The taxpayers in these suits invested in several lim-
ited partnerships sponsored by American Agri-Corp.
(AMCOR) in the 1980s that were targeted by the Internal
Revenue Service (IRS) as illegal tax shelters. In 1990 and
1991, the IRS issued notices of final partnership adminis-
trative adjustments (FPAA), disallowing the deductions
attributable to the AMCOR partnerships and demanding
that the partners pay the resulting deficiencies.
    Representative partners filed suit in the United
States Tax Court. While the Tax Court proceedings
progressed, the taxpayers settled with the IRS. The IRS
subsequently assessed additional interest against the
partners under LR.C. § 6621(c) for substantial underpay-
ment of income tax attributable to tax-motivated transac-
tions.
    After paying the taxes, the taxpayers brought this tax
refund case in the United States Court of Federal Claims,
asserting entitlement to a tax refund on the grounds that
the assessments were made after the statute of limita-
tions had expired, and the assessment of interest under
section 6621(c) was improper because the partnership
transactions were not tax-motivated transactions.
    The trial court held that it lacked jurisdiction over the
refund claims because the taxpayers were prohibited by
statute from bringing an action for a refund attributable
to partnership items, and that both claims, including the
statute of limitations claim, were partnership items that
should have been challenged in the partnership-level
proceeding instead of in partner-level proceedings.
    This appeal followed.
Case: 12-5081     Document: 20     Page: 3    Filed: 11/27/2012

3                                   RICHARD DAHLBERG v. US

    Federal Claims' jurisdiction over partnership tax re-
fund actions is limited by statute. Pursuant to the Tax
Equity and Fiscal Responsibility Act of 1982 ("TEFRA"),
Pub. L. No. 97-248, § 402(a), 96 Stat. 648, the tax treat-
ment of "partnership items" is determined in a single
partnership-level proceeding, and section 7422(h) of the
Internal Revenue Code enforces that principle by prohib-
iting partners from bringing individual actions "for a
refund attributable to partnership items[.]"
     In Prati and Keener, we held that statute of limita-
tions claims and challenges as to whether section 6621(c)
interest should have been assessed as sham transactions
are "partnership items," and thus the taxpayers were
required to raise the claim in the partnership level pro-
ceeding. Prati, 603 F.3d at 1306. Since the claims here
are indistinguishable from those in Prati and Keener, the
trial court's ruling that section 7422(h) bars these taxpay-
ers from asserting their section 6621(c) interest and
statute of limitations claims in these refund proceedings
is clearly correct as a matter oflaw.
     The taxpayers attempt to distinguish their statute of
limitations claim on the ground that, unlike the taxpayers
in Keener, they are unwilling to stipulate that statute of
limitations defenses fall within the IRS's regulatory
definition of a "partnership item."        See Treas. Reg.
§ 301.6231(a)(3)-1(b) (defining "partnership item" to
include "the legal and factual determinations that under-
lie the determination of the amount, timing, and charac-
terization of items of income, credit, gain, loss, deduction,
etc.").
    That these taxpayers may not have conceded such
ground does not alter the fact that their claims constitute
partnership items, and are thus barred from refund
proceedings. In Keener, this court found the IRS's defini-
Case: 12-5081     Document: 20     Page: 4   Filed: 11/27/2012

RICHARD DAHLBERG v. US                                    4

tion of "partnership item" to be a permissible interpreta-
tion of the statutory language. Applying that definition,
the Keener court concluded that it was broad enough to
encompass the taxpayer's statute of limitations claims.
That result, this court explained, was consistent with
"TEFRA's dual goals of centralizing the treatment of
partnership items and ensuring the equal treatment of
partners." 551 F.3d at 1363-64 & n.3.
    The taxpayers also contend that the Tax Court had no
jurisdictional authority to allow them to participate in the
partnership-level Tax Court suits and raise their claims
earlier. But this argument was addressed and rejected by
this court in Prati. There, we explained that even before
the statutory amendment in 1997, tax partners could
have participated in partnership level proceedings. Prati,
603 F.3d at 1307 n.4 ("[T]he 1997 amendment merely
codified prior practice in the Tax Court; the appellants, as
individual partners, were therefore free to participate in
the partnership-level proceedings to litigate the statute of
limitations issue.").
     The cases on which the taxpayers rely that were de-
cided after Prati are not to the contrary, because they do
not address the Tax Court's authority to allow individual
partners to participate in a timely filed partnership-level
proceeding. See A.I.M. Controls, LLC v. Comm'r of Inter-
nal Revenue, 672 F.3d 390 (5th Cir. 2012) (time period for
filing petition within TEFRA's express filing period is
jurisdictional); see also Henderson ex reI. Henderson v.
Shinseki, _ U.S. _, 131 S. Ct. 1197, 1202-03 (2011)
(directing courts to decide whether statutory filing periods
are jurisdictional based on Congressional intent). Be-
cause the tax partners could have raised these claims
during the Tax Court proceedings, we agree with the
government that their attempts to distinguish themselves
Case: 12-5081        Document: 20   Page: 5     Filed: 11/27/2012

5                                     RICHARD DAHLBERG v. US

from the taxpayers in Prati and Keener in that regard are
without merit.
      We therefore agree with the government that the
judgment of the Court of Federal Claims should be sum-
marily affirmed. See Joshua v. United States, 17 F.3d
378, 380 (Fed. Cir. 1994) (Summary affirmance of a case
"is appropriate, inter alia, when the position of one party
is so clearly correct as a matter of law that no substantial
question regarding the outcome of the appeal exists.").
      Accordingly,
      IT Is ORDERED THAT:
    (1) The motion is granted. The judgment of the Court
of Federal Claims is summarily affirmed.
      (2) Each side shall bear its own costs.

                                      FOR THE COURT

                                       /s/ Jan Horbaly
                                      Jan Horbaly
                                      Clerk

s19