Caveat, by Order filed 11/10/22, the Ninth Circuit vacated this decision discussed below and ordered rehearing en banc. 9th Cir. here; TN here. On 3/10/23, the Ninth Circuit en banc held that the "copy" of the allegedly timely filed return was not a filing to start the statute of limitations. See Seaview Trading, LLC v. Commissioner, 62 F.4th 1131 (9th Cir. 3/10/23), CA9 here, and GS here. and my blog on it, 9th Circuit En Banc Holds That Filing Tax Returns for State of Limitations Purposes Means Proper Filing as Prescribed in Regulations (Federal Tax Procedure Blog 3/11/23), here.
In Seaview Trading, LLC v. Commissioner, 34 F.4th 666 (9th Cir. 5/11/22), CA 9 here and GS here, the Court (majority panel) held that filing for starting a relevant statute of limitations (there TEFRA § 6229(a), for partnership return) is (from the summary)
when (1) an IRS official authorized to obtain and receive delinquent tax returns informs a partnership that a tax return is missing and requests that tax return, (2) the partnership responds by giving the IRS official the tax return in the manner requested, and (3) the IRS official receives the tax return, then the partnership has "filed" a tax return for purposes of § 6229(a).
The relevant facts and law, highly summarized, are: (1) pursuant to the regulations and procedures, the partnership return was required to be filed timely at the relevant IRS service center; (2) the IRS service center did not receive a timely filed 2001 partnership return; (3) the partnership did not timely file (or could not prove that it timely filed) an original 2001 partnership return (see JAT Note #2 below); (4) the IRS in due course audited the partnership for 2001; (5) in the course of the audit, the IRS agent requested and received a copy of the 2001 partnership return and had that copy in his possession by January 2006; and (6) in October 2010 (more than three years after the agent had the return in his possession for use in the audit), the IRS issued the partnership FPAA, noting that no return was filed but that a copy of the return was provided "during the examination;" the FPAA reduced the reported loss of $35 million to zero. [As an aside, likely a bullshit tax shelter, but that is only inference from the large loss disallowed.]
The partnership filed a petition in the Tax Court. The Tax Court held that "(1)
Seaview did not "file" the tax return by faxing a copy to the IRS
revenue agent or by mailing a copy to the IRS counsel, and (2) in any case, the
copies of the 2001 Form 1065 sent to the IRS in 2005 and 2007 were not "returns."
Seaview and the IRS then settled all their disputes but preserved Seaview's
right to appeal the Tax Court's denial of summary judgment."
The issue was whether a return (said to be a copy of the original return) delivered to an agent in the audit was a delinquent filing or whether the delinquent return must be filed with the service center. The Court held that the regulations requiring filing with the service center applied only to timely filed returns, that there are no regulations applying to filing delinquent returns and that "no IRS regulation prohibits the filing of untimely returns with a requesting IRS official." Based on that, the Court held "we hold that a delinquent partnership return is "filed" under § 6229(a) when an IRS official authorized to obtain and process a delinquent return asks a partnership for such a return, the partnership delivers the return to the IRS official in the manner requested, and the IRS official receives the return."
