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was held that the general partner, who signed the consent, had
authority to bind the partnership. Second, interpreting the
partnership agreement in that case, we held that the signing
partner was not prohibited from extending the period for
assessment for the partnership.
However, the U.S. Court of Appeals for the Fifth Circuit
reversed our decision in Medical. The Court of Appeals disagreed
with our interpretation of the partnership agreement. Based on
its interpretation, the Court of Appeals found that the general
partner who signed the consent, under State law, was not
authorized to bind the partnership. Finally, the Court of
Appeals addressed an estoppel argument raised at the appellate
level.
The Court of Appeals stated that
In order for equitable estoppel to apply, the
government must show that * * * [the partnership] was
aware of the facts, that * * * [the partnership]
intended the IRS to act on its representation that * *
* [the signing partner] was the TMP, that the
government did not know of the facts, and that the
government reasonably relied on * * * [the
partnership's] representations to its substantial
detriment. * * * [Medical & Business Facilities, Ltd.
v. Commissioner, 60 F.3d at 212.]
The Court of Appeals also explained that the regulations,
which provided the circumstances under which a TMP is designated
and made known to the Commissioner, were promulgated March 5,
1987. See sec. 301.6231(a)(7)-1T, Temporary Proced. & Admin.
Regs., 52 Fed. Reg. 6791 (Mar. 5, 1987). That regulation
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