-6-
Until 1997, the consequences for the Commissioner of treating a
TEFRA partnership as a small partnership and a small partnership
as a TEFRA partnership could be severe: If the Commissioner
incorrectly classified a partnership, this Court lacked
jurisdiction and had to dismiss the case. Frazell v.
Commissioner, 88 T.C. 1405, 1411 (1987); Maxwell, 87 T.C. at 788-
89. The Commissioner had the authority to correct his mistake
and issue the proper type of notice, but the statute of
limitations wasn't tolled by any procedural flubs and might
expire. Sec. 6501(a). This meant that a partner might go tax-
free by defeating a notice of deficiency with the argument that
the Commissioner should have sent him an FPAA, or defeating an
FPAA with the argument that the Commissioner should have sent him
a notice of deficiency.
This problem has since been fixed,4 but the present case
arose from a tax year that ended before the fix took effect. And
because this is a CDP appeal, it’s not our jurisdiction over
Nehrlich’s case that is in dispute--the notice of determination
is what gives that to us. Secs. 6320(c), 6330(d)(1). But
whether the Commissioner erred in upholding Nehrlich’s underlying
tax liability may well hinge on whether the Commissioner chose
4 Congress added section 6234 to the Code in 1997. Taxpayer
Relief Act of 1997, Pub. L. 105-34, sec. 1231(a), 111 Stat. 788,
1020. Section 6234(h) lets the Commissioner (and us) regard the
wrong type of notice as the right one.
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Last modified: November 10, 2007