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Government seeks rehearing in Seaview partnership return filing case

The Ninth Circuit’s holding is ‘in serious tension’ with precedent and misconstrues regulations, the government argues.

By Paul Bonner

Please note: This item is from our archives and was published in 2022. It is provided for historical reference. The content may be out of date and links may no longer function.

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The government on July 11, 2022, filed a petition to the Ninth Circuit for a rehearing en banc of the court’s decision in May in Seaview Trading, LLC, No. 20-72416 (9th Cir. 5/11/22), rev’g and remanding T.C. Memo. 2019-122.

In its 2—1 decision, a panel of the Ninth Circuit found that a copy of Seaview’s 2001 partnership return that it faxed to an IRS agent in 2005 constituted the return’s filing, making a 2010 Final Partnership Administrative Adjustment untimely. For prior coverage, see “Tax Matters: IRS Agent’s Receipt of a Copy of LLC’s Return Constitutes Its Filing, Ninth Circuit Holds,” JofA, Aug. 2022.

In its petition, the government argued that by holding that Treasury regulations are silent on the proper place for filing a late return, the panel’s majority “found a nonexistent gap in the … regulation.” Rather, the government argued, the regulations require returns to be filed with the service center prescribed in the relevant IRS revenue procedure, publication, form, or form instructions (Regs. Sec. 1.6031(a)-1(e)(1)). In addition, the petition states, the Supreme Court has held that taxpayers must exercise “meticulous compliance” with all specified conditions to benefit from a statute of limitation (quoting Lucas v. Pilliod Lumber Co., 281 U.S. 245, 249 (1930)).

— Paul Bonner is the JofA’s editor, tax.