The United States Tax Court, in North Wall Holdings, LLC, Schuler Investments, LLC, a Partner Other Than the Tax Matters Partner v. Commissioner of Internal Revenue, 165 T.C. No. 9 (2025), addressed a foundational issue regarding the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) unified audit and litigation procedures: whether the statutory deadlines for filing a petition for readjustment of partnership items are jurisdictional limitations or merely claims processing rules subject to equitable tolling. The Court ultimately held that the deadlines prescribed in I.R.C. § 6226(a) and (b) are jurisdictional and that equitable tolling is inapplicable.

Facts of the Case

North Wall Holdings, LLC (North Wall), is treated as a partnership for federal income tax purposes and was subject to the repealed TEFRA unified audit and litigation procedures for the tax year ending December 31, 2017. Schuler Investments, LLC (Schuler), a Georgia limited liability company, was a notice partner of North Wall for the year at issue.

On May 6, 2021, the Internal Revenue Service (IRS) mailed a Notice of Final Partnership Administrative Adjustment (FPAA) to North Wall’s Tax Matters Partner (TMP). The FPAA disallowed a claimed noncash charitable contribution deduction of $45,800,000 for 2017 and determined the applicability of penalties under sections 6662A and 6662(c)–(e) and (h). The Commissioner also mailed copies of the FPAA to other partners, including Schuler, on June 1, 2021. The copy of the FPAA sent to Schuler noted that the FPAA was mailed to the TMP on May 6, 2021.

The partnership’s TMP did not file a petition challenging the FPAA within the exclusive 90-day period granted to the TMP under I.R.C. § 6226(a). Under I.R.C. § 6226(b)(1), a notice partner, such as Schuler, then has 60 days following the close of the 90-day TMP period to file a petition. The FPAA explicitly stated that a partner must file the petition "after the 90th day, but on or before the 150th day from the date we mailed the FPAA to the TMP".

Schuler filed its Petition on October 21, 2021. Given that the FPAA was mailed to the TMP on May 6, 2021, Schuler’s Petition was electronically filed 168 days after the FPAA mailing date, or 18 days after the 150-day statutory period had expired. Although the Petition affirmatively alleged that Schuler was filing within the 150-day period set forth in section 6226(b), it made no reference to the date the FPAA was mailed to the TMP.

Taxpayer’s Request for Relief

The Commissioner filed a Motion to Dismiss for Lack of Jurisdiction on the ground that Schuler’s Petition was untimely. Schuler objected to the motion, arguing that the deadline within which to file a petition from an FPAA is not jurisdictional. Schuler relied on the Supreme Court’s decision in Boechler, P.C. v. Commissioner, 142 S. Ct. 1493 (2022), which addressed whether a deadline challenging a collection determination was jurisdictional. The implication of Schuler’s argument was that, if the deadline were nonjurisdictional, it would be subject to equitable tolling.

Court’s Analysis of the Law

The Court undertook a rigorous analysis to determine whether the filing deadline in I.R.C. § 6226(b) constitutes a jurisdictional limit or a claims processing rule, focusing on the “text, context, and relevant historical treatment” of the provision, as required by Supreme Court precedent (Musacchio v. United States, 577 U.S. 237, 246 (2016)).

Jurisdictional Limit Determination

Text and Context of Section 6226: The Tax Court may exercise jurisdiction only as expressly provided by statute. Section 6226 grants the Tax Court, U.S. district courts, and the Court of Federal Claims the authority to redetermine partnership item adjustments. The Court emphasized that the text of section 6226(b) places the petition deadline within the jurisdictional grant, authorizing a partner to file a petition only “within 60 days after the close of the 90-day period set forth in subsection (a)”. The requirement of an FPAA (the jurisdictional notice) is linked in the same sentence as the petition periods, similar to the structure of I.R.C. § 6213 governing deficiency cases. The TEFRA provisions, taken as a whole, "sets forth its limitations in a highly detailed technical manner, that, linguistically speaking, cannot easily be read as containing implicit exceptions" (Brockamp, 519 U.S. at 350).

Coordination and Consequences: The TEFRA petition deadlines coordinate to ensure only one partnership-level proceeding. For example, the requirement that only the TMP can file during the initial 90 days operates as a timing requirement for all other partners, and premature petitions were historically dismissed for lack of jurisdiction. Furthermore, I.R.C. § 6226(f) expressly links the timely filing of a petition to the court’s jurisdictional authority: “A court with which a petition is filed in accordance with this section shall have jurisdiction to determine all partnership items…”. The U.S. Court of Appeals for the Ninth Circuit, in SNJ Ltd. v. Commissioner, 28 F.4th 936 (2022), specifically held that section 6226(f) links the filing deadline to a grant of jurisdiction.

Historical Treatment and Congressional Action: Historically, courts have consistently treated the TEFRA petition deadlines as jurisdictional. The Court noted that Congress, by enacting I.R.C. § 6226(b)(5) in 1997 to provide a remedy for premature petitions, acknowledged that, absent this amendment, a petition filed outside the statutorily prescribed timeframe would be subject to a jurisdictional dismissal. This Congressional action confirmed that the Tax Court did not have the inherent power to alter the petition periods. Appellate courts, including the Fifth and Ninth Circuits, have upheld dismissals for lack of jurisdiction due to untimely TEFRA petitions (A.I.M. Controls, L.L.C. v. Commissioner, 672 F.3d 390 (5th Cir. 2012); SNJ Ltd. v. Commissioner, 28 F.4th 936 (9th Cir. 2022)).

Rebuttal of Equitable Tolling Presumption

Even if the deadlines were deemed nonjurisdictional, the Court found the rebuttable presumption in favor of equitable tolling was defeated. The presumption is rebutted if there is "good reason to believe that Congress did not want the equitable tolling doctrine to apply" (Arellano v. McDonough, 143 S. Ct. 543 (2023); Brockamp, 519 U.S. at 350).

Complexity and Specific Exceptions: The TEFRA scheme is highly detailed and contains explicit, isolated exceptions that demonstrate Congress’s specific intent regarding flexibility. These exceptions include:

Remedy for premature petitions (I.R.C. § 6226(b)(5)).
Special rights for partners who did not receive proper notice (I.R.C. § 6223(e)).
Removal of partners subject to bankruptcy or other unique, partner-specific circumstances (I.R.C. § 6231(c); Treas. Reg. §§ 301.6231(c)-4 through -8).

The existence of these targeted exceptions indicates that Congress did not intend for courts to read in other "unmentioned, open-ended, ‘equitable’ exceptions" (Brockamp, 519 U.S. at 352).

Administrative Incongruence: Allowing equitable tolling would create serious administrative problems, particularly because TEFRA proceedings affect potentially thousands of partners. Equitable tolling would be "fundamentally incongruent with the statutory scheme" (Arellano, 143 S. Ct. at 551).

Disrupting Assessment: If a timely petition is not filed, the restrictions on assessment are lifted, and the Commissioner initiates the process for computational adjustments and Notices of Deficiency. If an untimely petition were permitted via equitable tolling, the Commissioner would face conflicting obligations regarding assessment and the one-year limitations period tolling under I.R.C. § 6229(d). Crucially, the Tax Court’s power to enjoin assessment is limited only to instances where a timely petition has been filed (I.R.C. § 6225(b)).
Divesting Jurisdiction: An untimely petition to the Tax Court, if allowed by equitable tolling, could divest another court (where a timely petition may have been filed) of jurisdiction because the priority provision in I.R.C. § 6226(b)(2) mandates that the first action brought in the Tax Court shall proceed, regardless of whether it was timely.
Gamesmanship: Allowing one partner’s specific circumstances to justify equitable tolling would treat all partners as parties, potentially allowing thousands of partners to benefit from the single partner’s circumstances to circumvent the rules of section 6226.

Application of Law to Facts and Conclusion

The Tax Court applied its findings to Schuler's filing, noting that the Petition was filed 168 days after the FPAA was mailed to the TMP, 18 days beyond the 150-day deadline set forth in I.R.C. § 6226(b).

Based on its analysis of the text, context, and historical treatment, the Court concluded that the 150-day deadline in section 6226(b) is jurisdictional.

Further, the Court concluded that even setting aside the jurisdictional question, the complex TEFRA provisions, designed to unify partnership proceedings and streamline assessment, rebut the presumption in favor of equitable tolling.

Therefore, Schuler’s Petition was untimely. The Commissioner’s Motion to Dismiss for Lack of Jurisdiction was granted.

Concurring Opinions

While the majority opinion held the deadline to be jurisdictional, several judges concurred only in the result, arguing that the Court should have focused solely on the lack of equitable tolling rather than the jurisdictional question. Judges Toro, Urda, and Pugh agreed with Part VI of the Court's opinion, which held that equitable tolling does not apply. Judge Weiler concurred in the result, finding Schuler failed to establish potential grounds for equitable tolling, and would have dismissed the case for failure to state a claim upon which relief may be granted, rather than lack of jurisdiction. Judge Marshall joined Part VI (agreeing that equitable tolling is unavailable) but dissented in part, agreeing with Judge Weiler that dismissal should be for failure to state a claim.

Prepared with assistance from NotebookLM.