A partnership changes its address. What should it do to notify the IRS? Well, that’s fairly simple: Like any taxpayer it should send in Form 8822. Today, the Tax Court looked at a case where the partnership didn’t follow the normal procedure.
Partnerships are required to designate a “Tax Matters Partner” (TMP). When the IRS has questions/issues/needs to send a notice, it sends the same to the TMP. In this case, the IRS sent 14 final partnership administrative adjustment (FPAA) notices to three different addresses. As the Tax Court said, “By mailing FPAAs to multiple addressees at multiple addresses, respondent made a good faith effort to notify all affected parties of the partnership adjustments, thus satisfying the notice requirement of sec. 6223(a).” And one of the addresses was the last address of the Form 1065, thus making it a correct address to mail the FPAAs.
The partnership wanted to challenge the FPAAs. (Among other issues, the IRS believes the partnership is a sham.) From this case and two related cases the Tax Court ruled on, it’s unclear whether or not the partnership received the FPAAs timely. It’s quite clear that they didn’t respond timely (the Tax Court case was brought two years after mailing of the FPAAs). Because the IRS mailed the FPAAs to a correct address, the Tax Court dismissed the partnership’s petition.
Consider what would have happened to the case had the partnership correctly filed a change of address—there’s a good chance their case would be heard at the Tax Court. (Whether or not they would prevail is unknown, as the issues involved were never argued.) Certified mail costs under $5.00. I guarantee that the IRS asked the partnership for more than $5.00.
Case: Stone Canyon Partners v. Commissioner, T.C. Memo 2007-377