U.S. Code > Title 26 Internal Revenue Code > Subtitle F—Procedure and Administration (§§ 6001—7874) > CHAPTER 63—ASSESSMENT (§§ 6201—6255) > Subchapter C—Tax Treatment of Partnership Items (§§ 6221—6234) > § 6223. Notice to partners of proceedings

§ 6223. Notice to partners of proceedings

(a) Secretary must give partners notice of beginning and completion of administrative proceedings
The Secretary shall mail to each partner whose name and address is furnished to the Secretary notice of—
(1) the beginning of an administrative proceeding at the partnership level with respect to a partnership item, and
(2) the final partnership administrative adjustment resulting from any such proceeding.
A partner shall not be entitled to any notice under this subsection unless the Secretary has received (at least 30 days before it is mailed to the tax matters partner) sufficient information to enable the Secretary to determine that such partner is entitled to such notice and to provide such notice to such partner.
(b) Special rules for partnership with more than 100 partners
(1) Partner with less than 1 percent interest
Except as provided in paragraph (2), subsection (a) shall not apply to a partner if—
(A) the partnership has more than 100 partners, and
(B) the partner has a less than 1 percent interest in the profits of the partnership.
(2) Secretary must give notice to notice group
If a group of partners in the aggregate having a 5 percent or more interest in the profits of a partnership so request and designate one of their members to receive the notice, the member so designated shall be treated as a partner to whom subsection (a) applies.
(c) Information base for Secretary’s notices, etc.
For purposes of this subchapter—
(1) Information on partnership return
Except as provided in paragraphs (2) and (3), the Secretary shall use the names, addresses, and profits interests shown on the partnership return.
(2) Use of additional information
The Secretary shall use additional information furnished to him by the tax matters partner or any other person in accordance with regulations prescribed by the Secretary.
(3) Special rule with respect to indirect partners
If any information furnished to the Secretary under paragraph (1) or (2)—
(A) shows that a person has a profits interest in the partnership by reason of ownership of an interest through 1 or more pass-thru partners, and
(B) contains the name, address, and profits interest of such person,
then the Secretary shall use the name, address, and profits interest of such person with respect to such partnership interest (in lieu of the names, addresses, and profits interests of the pass-thru partners).
(d) Period for mailing notice
(1) Notice of beginning of proceedings
The Secretary shall mail the notice specified in paragraph (1) of subsection (a) to each partner entitled to such notice not later than the 120th day before the day on which the notice specified in paragraph (2) of subsection (a) is mailed to the tax matters partner.
(2) Notice of final partnership administrative adjustment
The Secretary shall mail the notice specified in paragraph (2) of subsection (a) to each partner entitled to such notice not later than the 60th day after the day on which the notice specified in such paragraph (2) was mailed to the tax matters partner.
(e) Effect of Secretary’s failure to provide notice
(1) Application of subsection
(A) In general
This subsection applies where the Secretary has failed to mail any notice specified in subsection (a) to a partner entitled to such notice within the period specified in subsection (d).
(B) Special rules for partnerships with more than 100 partners
For purposes of subparagraph (A), any partner described in paragraph (1) of subsection (b) shall be treated as entitled to notice specified in subsection (a). The Secretary may provide such notice—
(i) except as provided in clause (ii), by mailing notice to the tax matters partner, or
(ii) in the case of a member of a notice group which qualified under paragraph (2) of subsection (b), by mailing notice to the partner designated for such purpose by the group.
(2) Proceedings finished
In any case to which this subsection applies, if at the time the Secretary mails the partner notice of the proceeding—
(A) the period within which a petition for review of a final partnership administrative adjustment under section 6226 may be filed has expired and no such petition has been filed, or
(B) the decision of a court in an action begun by such a petition has become final,
the partner may elect to have such adjustment, such decision, or a settlement agreement described in paragraph (2) of section 6224 (c) with respect to the partnership taxable year to which the adjustment relates apply to such partner. If the partner does not make an election under the preceding sentence, the partnership items of the partner for the partnership taxable year to which the proceeding relates shall be treated as nonpartnership items.
(3) Proceedings still going on
In any case to which this subsection applies, if paragraph (2) does not apply, the partner shall be a party to the proceeding unless such partner elects—
(A) to have a settlement agreement described in paragraph (2) of section 6224 (c) with respect to the partnership taxable year to which the proceeding relates apply to the partner, or
(B) to have the partnership items of the partner for the partnership taxable year to which the proceeding relates treated as nonpartnership items.
(f) Only one notice of final partnership administrative adjustment
If the Secretary mails a notice of final partnership administrative adjustment for a partnership taxable year with respect to a partner, the Secretary may not mail another such notice to such partner with respect to the same taxable year of the same partnership in the absence of a showing of fraud, malfeasance, or misrepresentation of a material fact.
(g) Tax matters partner must keep partners informed of proceedings
To the extent and in the manner provided by regulations, the tax matters partner of a partnership shall keep each partner informed of all administrative and judicial proceedings for the adjustment at the partnership level of partnership items.
(h) Pass-thru partner required to forward notice
(1) In general
If a pass-thru partner receives a notice with respect to a partnership proceeding from the Secretary, the tax matters partner, or another pass-thru partner, the pass-thru partner shall, within 30 days of receiving that notice, forward a copy of that notice to the person or persons holding an interest (through the pass-thru partner) in the profits or losses of the partnership for the partnership taxable year to which the notice relates.
(2) Partnership as pass-thru partner
In the case of a pass-thru partner which is a partnership, the tax matters partner of such partnership shall be responsible for forwarding copies of the notice to the partners of such partnership.