TEFRA was passed in 1982 to allow examinations and statutes to be controlled at the partnership level. This eliminated the need to control each individual partner statute.

Internal Revenue Code sections 6229, Period of Limitations for Making Assessments, 6501, Limitations on Assessment and Collection, and the TEFRA act of 1982 are the primary sources of authority, in addition to applicable Internal Revenue Manual (IRM) Sections.

Section 1101 of the Bipartisan Budget Act (BBA) of 2015 repealed TEFRA partnership and Electing Large Partnership (ELP) provisions beginning with tax years beginning 1/1/2018 and replaced it with a new centralized partnership audit regime. The new regime provides for determination, assessment and collection of underpayments at the partnership level unless certain elections are made by the partnership.

The author of this IRM is shown on the Product Catalog Page as the originator.

Policy, Planning, Quality, and Analysis (PPQA) provides trend and data analyses and detailed summary reports for Appeals.

See IRM 8.1.1-1, Common Terms Used in Appeals, for common terms and definitions used in IRM Part 8. Terms listed in this exhibit are not included in this section.

The Taxpayer Bill of Rights (TBOR) lists rights that already existed in the tax code, putting them in simple language and grouping them into 10 fundamental rights. Employees are responsible for being familiar with and acting in accord with taxpayer rights. See IRC 7803(a)(3), Execution of Duties in Accord with Taxpayer Rights. For additional information about the TBOR, see https://www.irs.gov/taxpayer-bill-of-rights.

IRC 6229 provides for an extended statute in special circumstances.

In case of fraud, IRC 6229(c)(1) sets out two distinct provisions.

In certain situations, partnership items are converted to nonpartnership items. The conversion removes the assessment of tax attributable to partnership items from the purview of IRC 6229(a). (See IRM 8.19.1.6.6.4, IRC 6229(a) Statutory Period of Limitations-TEFRA Partnership Key Case).

The statute of limitations on converted partnership items is governed by IRC 6229(f). The period for assessing any tax attributable to partnership items or any affected items will not expire before one year from the date of the conversion. This statute may be extended.

For partial settlements executed after August 5, 1997, the period for assessment shall be determined as if the agreement had not been entered into. See IRC 6229(f)(2).

The one-year period for assessment mentioned in paragraph (2)(a) is often referred to as the one-year statute date or one-year assessment date or one-year date.

The statutory period of limitations for assessments of tax attributable to partnership items is suspended when the Secretary mails an FPAA to the Tax Matters Partner (TMP) (IRC 6229(d)). The statute is suspended for the period in which a petition may be filed (150 days) and, if a petition is filed, until the decision of the Court is final (including the period for appeal), and for one year thereafter.

The one-year period for assessment mentioned in paragraph (1) is often referred to as the one-year statute date or one-year assessment date or one-year date.

Account and Processing Support (APS) statute responsibility for TEFRA key cases is the same as covered in IRM 8.21.2. Whenever a TEFRA key case consent is signed by a POA, a notation should be made in the notes section of the Case Summary Card (CSC) alerting the ATM and the Appeals Technical Employee (ATE) of this fact.

The statute of limitations must be verified on new case receipts. There must be at least 365 days remaining on the statute of non-docketed TEFRA key cases before Appeals will accept them.

If the ATE inputs a change to the statute critical data field(s) to correct the statute of a newly assigned case, and the AIMS indicator = Y, the ATE must update that statute date and/or code on ACDS, using the AIVP Statute Validation System (SVS). The ATE will select the PTM (Processing Team Manager) from the available menu options to submit the request to APS for assignment of the APS TE for the AIMS update. Once the request is routed to the PTM, it is assigned to an APS TE to make the change on AIMS, using Command Code AMSTUB. This automatically changes PCS.

Appeals Technical Employees’ statute responsibility for TEFRA key cases is the same as covered in IRM 8.21.3, General Guidelines for Appeals Technical Employees.

Refer to IRM 8.19.1.6.6 and IRM 8.19.10.5.5 for guidelines in determining the expiration date for the statute of limitations. The ATE is responsible for verifying the accuracy of the statute determination on the ACDS generated CSC within 5 workdays of receipt of the case.

The ATE makes an entry in the Case Activity Record (CAR) stating that statute verification was made and the CSC is accurate or the CSC is inaccurate. When the statute of limitations on the CSC is inaccurate, the ATE must update that statute date and/or code on ACDS, using the AIVP Statute Validation System (SVS). If the AIMS indicator = Y, the ATE will select the PTM from the available menu options to submit the request to APS for assignment of the APS TE for the AIMS update. Once the request is routed to the PTM, it is assigned to an APS TE to make the change on AIMS, using Command Code AMSTUB. This automatically changes PCS.

A TEFRA key case should not be accepted in Appeals unless there are at least 365 days remaining on the statute.

ATM’s responsibility for TEFRA key cases is the same as covered in IRM 8.21.4, Appeals Management Statute Responsibility. However, unlike a Statutory Notice of Deficiency (SND), an FPAA cannot be rescinded, therefore the guidelines in IRM 8.21.4 do not apply to TEFRA key cases.

While the ATE is primarily responsible for the statute on the TEFRA key case until it is submitted to APS, the ATM should generally monitor TEFRA key cases with a statute on ACDS of less than 90 days to ensure that a timely FPAA is issued or that the CPF or IRS function with jurisdiction of the partner is notified of a final court decision.

Upon receipt of an income tax case (other than a case referred to Appeals under the early referral, fast-track mediation, or fast-track settlement ADR programs), the APS employee will check the AMDIS and/or AMDISA to determine if there is a PICF Code 4 or 5 on the Pass-Through Control System (PCS), indicating a TEFRA partnership linkage. See IRM 8.19.10.4.4.2, Partnership Inventory Control File (PICF) Indicator.

If there is a PICF Code 4 or 5 and the case is either a CIC corporation, Joint Committee, or other corporate specialty case, APS will obtain a TSUMYI to determine if there is an open TEFRA linkage (the one-year statute date field is either blank or contains an eight digit date). The one-year statute date field appears in the column with the heading 1YR-ST/P.

If TSUMYI reflects 11111111 in the one-year statute date field, the assessment has been made and that TEFRA partnership linkage will not need to be input on ACDS.

If the TSUMYI reflects an open TEFRA linkage (the one-year statute date field is either blank or contains an eight digit date), the TEFRA partnership will be input on ACDS as a REF (reference) return to the case and a Case Summary Card (CSC) will be generated.

The APS employee will include the CSC on the case, together with the AMDIS or AMDISA and the TSUMYI and any REF CSCs on the open TEFRA linkages, along with the case file when it is forwarded to the ATM.

Appeals generally will not accept a case with less than 365 days remaining on the statute, including a one-year statute date for a TEFRA partner. If the case is either a CIC corporation, Joint Committee, or other corporate specialty case, and there is an eight digit date in the 1YR-ST/P field of the TSUMYI that has less than 180 days remaining, or the eight digit date has expired, the APS employee will notify the ATM by secure email on the same day the statute information is discovered.

APS will update the statute on AIMS within 5 workdays of the receipt of the update request from the ATE.

APS is responsible for the TEFRA one-year statute date until the case is received by the ATM (if Appeals will retain the case) or is returned to Compliance (if Appeals will not be retaining the case).

Upon receipt of the case and CSCs from the ATM, review the file to determine that all open TEFRA linkages (the one-year statute date field is either blank or contains an eight digit date) are correctly shown on ACDS, including verifying the accuracy of the CSCs.

If the TSUMYI shows a one-year statute date of 11111111, and the TEFRA key case was not a no-change, verify that the assessment was made. This will require securing a transcript and reviewing the administrative file for a closing package. The closing package will contain the following items:

If the TSUMYI shows an eight digit one-year statute date, any additional tax due must either be assessed by this date (see "Assessing Tax from TEFRA Issues" below) or the one-year statute date will have to be extended with a consent (see "Securing and Processing Consents" below).

Corrections to the CSC, including corrections to the TEFRA one-year statute date, must be completed using the AIVP Statute Validation System (SVS), and a validation that the statute critical data fields are accurate must be submitted in ACDS.

If the case is not a CIC corporation, Joint Committee, or other corporate specialty case, notify APS in writing that Appeals does not have responsibility for the TEFRA aspects and request that the REF records on ACDS be removed.

In the event of an improper identification of a TEFRA partner case, the ATE should check AMDIS or AMDISA upon the receipt of any income tax case for PICF Code 4 or 5. This excludes a case referred to Appeals under the early referral, fast-track mediation, or fast-track settlement ADR provisions.

If there is a PICF Code 4 or 5 and the case is either a CIC corporation, Joint Committee, or other corporate specialty case, check TSUMYI to determine if there is an open TEFRA linkage (the one-year statute date field is either blank or contains an eight digit date) that is presently not controlled on ACDS as a REF return. If so, promptly notify APS to input the linkage on ACDS using the instructions in IRM 8.19.6.4.1.

Refer to IRM 8.19.6.17.1.1(7) for the responsibilities of ATEs upon receipt of a case with a TEFRA linkage. See IRM 8.21.6.4.4 for statute controls on TEFRA partner cases by ATEs.

The ATE remains responsible for the TEFRA one-year statute until the case is received by the ATM for approval (if applicable); is received by APS for assessment of the tax relating to the issues with the one-year statute; or is sent for final closing of the case to either Counsel or Compliance.

Upon receipt of the case from APS, there may be TEFRA one-year statute dates that either have less than 180 days remaining and/or have expired.

When determining whether to accept jurisdiction, the ATM should consider if these TEFRA one-year statute dates have been extended, or if they relate to no-change examinations which Compliance has not updated on PCS.

The Compliance Case Manager/Team Manager as well as the examining agent may need to be contacted before determining whether the case will be retained by Appeals.

If a case has one or more one-year statute dates with less than 180 days remaining, the ATM will notify APS by secure email as to whether the case will be retained by Appeals. Any discussions between the ATM and Compliance will be summarized and included in the secure email that is sent to APS. The secure email will be included with the case file when it is assigned to the ATE.

If the case is not retained by Appeals in whole or in part because of the TEFRA one-year statute date(s) with less than 180 days, APS will return the case immediately to Compliance. Every effort should be made to return the case no later than the next workday (using controlled correspondence).

The ATM will call the Case Manager/Team Manager to alert them that the case is being returned. The file should be documented accordingly.

The ATM is responsible for the TEFRA one-year statute dates while the case is assigned to his or her team or group.

ATEs should individually monitor the TEFRA one-year statute dates on cases assigned to them.

Every six months (March and September), research all cases assigned that have TEFRA linkages controlled on ACDS (including cases now in Part III Counsel jurisdiction) and "TFINV" in the STATCD field to determine if a TEFRA one-year statute date appears on the TSUMYI.

The ATE will review any PCS statute reports received from the ATT. When a PCS statute report is received, review the report for accuracy, including securing a current TSUMYI (if desired), and direct any questions about the report to the ATT.

Depending on what triggered the TEFRA one-year statute date, the TEFRA one-year statute date may be extended. Refer to IRM 8.19.6.5, Assessment of TEFRA Partnership Issues, for complete guidelines on assessment of issues from TEFRA partnerships, including securing consents, updating ACDS with the new statute date, and processing Form 8339 to update the statute on the PCS.

The ATE will secure a closing package on any TEFRA one-year statute that contains an eight-digit date in the one-year statute date field as soon as possible.

When Appeals has a case in inventory that has linkages to a TEFRA partnership and, the partnership case is resolved, Appeals should receive a closing package from the CPF that contains the documents showing the resolution of the TEFRA partnership issues.

Occasionally the administrative file received from Compliance has one or more closing packages that had been received from the CPF, or were related to a TEFRA partnership that was assigned to the ATE.

If there is a TEFRA one-year statute date but no closing package in the file, the package should be requested from the applicable CPF as soon as possible.

The closing package contains the legal document authorizing the assessment (the signed settlement agreement, entered court decision, or defaulted FPAA), as well as the Form 4605-A and Form 886-Z that reflects the adjustments to the TEFRA partnership return and each partner's share of the corrected items.

There should be a TEFRA one-year statute date for each closing package. The date will either show 11111111 (assessment has been made) or contain an eight-digit date reflecting the date that the assessment must be made by (or extended by, if applicable).

For each TEFRA one-year statute date that the ATE determines will not (or cannot) be extended, they will request a computation from a TCS to reflect the tax generated by the TEFRA adjustments from the completed TEFRA proceeding. The TEFRA adjustments will be processed as a partial agreement if there are non-TEFRA issues still under Appeals consideration or if there are other (unresolved) TEFRA issues.

When forwarding a case to a TCS for a tax computation, the TEFRA one-year statute date(s) will be clearly identified on the Form 3608, Request for TCS Service, and the case clearly marked as a Priority if it either has a short statute or where interest is suspended because of the applicability of the provisions of IRC 6601(c).

The ATE is responsible for the statute, including TEFRA partner one-year statutes, until the statute is identified in writing to the Appeals Team Manager or APS on Form 5402 (or an attachment).

Form 8339 should be completed and provided to APS in order for the statute to be updated on PCS once the assessment has been made.

Upon receipt of a TEFRA partner case, APS will use the procedures found in the following sections to make an assessment of the tax from the TEFRA adjustments:

After the assessment has been made, the Form 8339 that was completed by the ATE should be submitted to APS in order that the statute can be updated on PCS.

APS has responsibility for the statute, including TEFRA one-year statutes, on a cases in APS jurisdiction when the statute is identified in writing on the Form 5402 and updated on ACDS.

A TEFRA partner case may be closed to several different functions. Unless all of the one-year statute dates reflect assessments (the TSUMYI reflects 11111111 for all of the one-year statute dates), the case cannot be fully closed from AIMS. When closing a TEFRA partner case with an open TEFRA linkage (the date is either blank or contains an eight digit date), it is essential that the TEFRA one-year statute date(s) be clearly identified on any transmittals, and precise instructions for protecting the statute(s) be provided.

Procedures will vary depending upon whether the case is being fully closed on AIMS after the assessments are made and whether the case is a CIC corporation, Joint Committee, or other corporate specialty case. Detailed processing procedures are found in the IRM sections listed in paragraph (1) above.

If the TEFRA partner case will be forwarded to either the Compliance Field Group or a CPF after any assessments are made, the transmittal Form 3210 will clearly identify any remaining open TEFRA linkages (the one-year statute date field is either blank or contains an eight digit date).

If a TEFRA partner case will be forwarded to Counsel when the non-TEFRA issues are unagreed (either upon petition of a notice of deficiency or transmitting a case for trial preparation), and the case is either a CIC corporation, Joint Committee, or other corporate specialty case, the Form 3210 will clearly identify any remaining open TEFRA linkages (the one-year statute date field is either blank or contains an eight digit date).

If a TEFRA partner case will be forwarded to the Appeals Quality Measurement Staff (AQMS), and the case is either a CIC corporation, Joint Committee, or other corporate specialty case, APS will notify the ATE. (See IRM 8.21.6.4.4.2.4, Appeals Quality Measurement Staff (AQMS) Jurisdiction).

APS is responsible for the TEFRA one-year statute until the tax is assessed (if an assessment is required) or the case is transferred to either Counsel or Compliance. When a case is forwarded to another office or function using a transmittal Form 3210, APS should ensure the case has been acknowledged.