Kings Road Property, LLC v. Commissioner, 167 T.C. No. 11 (2026)

In Kings Road Property, LLC v. Commissioner, 167 T.C. No. 11 (2026), the United States Tax Court addressed two pivotal issues arising under the partnership audit and litigation procedures of the Bipartisan Budget Act of 2015 (BBA), codified at Internal Revenue Code (I.R.C.) §§ 6221–6241. First, the court held that the 90-day filing deadline set forth in I.R.C. § 6234(a) for petitioning the Tax Court following the issuance of a Final Partnership Adjustment (FPA) is a nonjurisdictional claims-processing rule subject to equitable tolling. Second, the court established that misinformation provided by Internal Revenue Service (IRS) personnel, combined with undelivered certified mail, constitutes extraordinary circumstances justifying equitable tolling where the taxpayer demonstrates continuous diligence. Finally, the court rejected taxpayer cross-challenges concerning minor address abbreviations and acting official authority under the Federal Vacancies Reform Act (FVRA), affirming that an FPA remains statutory valid even if returned undelivered or unsigned.

For certified public accountants (CPAs), enrolled agents (EAs), and tax litigators, Kings Road Property provides essential guidance on statutory computation mechanics, administrative reliance, and procedural motion practice in BBA partnership examinations.

Facts of the Case

Kings Road Property, LLC (Kings Road) is a limited liability company treated as a partnership for federal income tax purposes and governed by the BBA partnership procedures. Kings Road Manager, LLC served as its designated partnership representative. Both entities maintained their principal place of business at 100 Bull Street, Suite 212, Savannah, Georgia 31401.

On October 14, 2021, Kings Road filed its 2020 Form 1065 (U.S. Return of Partnership Income), claiming a charitable contribution deduction of $30,570,000 for a conservation easement. The IRS examined the return and, on May 24, 2024, mailed a Notice of Proposed Partnership Adjustment (NOPPA) under I.R.C. § 6231(a)(2) to Kings Road and its partnership representative at “100 Bull Street, Ste 212.” The NOPPA proposed to disallow the $30,570,000 deduction, asserting an imputed underpayment of $11,310,900 alongside an accuracy-related penalty of $4,395,748 under I.R.C. § 6662.

Kings Road received the NOPPA and elected not to submit a modification request under I.R.C. § 6225(c). Subsequent to receiving the NOPPA, Kings Road retained new legal counsel. On August 27, 2024, the IRS Centralized Authorization File (CAF) Unit processed new Forms 2848 (Power of Attorney and Declaration of Representative) designating new counsel.

Anticipating the issuance of an FPA, new counsel monitored the statutory windows under I.R.C. § 6235(a)(3), which mandates that the IRS issue an FPA within 330 days of issuing a NOPPA when no modification request is submitted. Counsel calculated 330 days from the May 24, 2024 NOPPA to be April 19, 2025. Because April 19 fell on a Saturday, counsel applied the weekend extension rule of I.R.C. § 7503 to establish April 21, 2025 as the statutory deadline for the IRS to mail the FPA. Counsel then added the 90-day petition window specified in I.R.C. § 6234(a), concluding that if the FPA were mailed on April 21, 2025, the deadline to petition the Tax Court would expire on July 20, 2025 (a Sunday, extending to Monday, July 21, 2025).

Unbeknownst to new counsel, the IRS Technical Services Passthrough Coordinator (TSPC) had already issued the FPA on March 25, 2025—nearly a month prior to the statutory deadline. The IRS mailed the FPA packages via certified mail to Kings Road and its partnership representative at “100 BULL ST STE 212,” as well as to Kings Road’s former counsel whose Form 2848 dated to 2022. The IRS failed to mail an FPA package to newly designated counsel.

Both FPA packages sent to Kings Road and its partnership representative were returned to the IRS in April 2025 marked “RETURN TO SENDER NOT DELIVERABLE AS ADDRESSED UNABLE TO FORWARD.” USPS tracking logs erroneously reflected delivery on April 2 and April 3, 2025. Former counsel received her copy, notified the IRS that she no longer represented the partnership, and forwarded the document to new counsel.

In May 2025—approximately two months after the FPA was mailed—new counsel contacted the IRS directly to inquire whether an FPA had been issued. IRS personnel explicitly informed counsel that “an FPA had not been mailed.”

Relying on this official representation and her calculations based on the NOPPA mailing date, counsel filed a protective petition with the U.S. Tax Court on July 9, 2025. Because the IRS had actually mailed the FPA on March 25, 2025, the statutory 90-day window under I.R.C. § 6234(a) had expired on June 23, 2025. Consequently, the petition was filed 106 days after the FPA mailing date—16 days past the 90-day statutory mark.

Taxpayer Requests for Relief and Procedural Motions

The litigation commenced with opposing jurisdictional motions:

The Commissioner’s Motion to Dismiss for Lack of Jurisdiction: The IRS argued that under I.R.C. § 6234(a), the Tax Court lacks jurisdiction because the petition was filed 16 days after the expiration of the strict 90-day period following the March 25, 2025 FPA mailing date.
Taxpayer’s Objection and Assertion of Equitable Tolling: Kings Road opposed the IRS motion, asserting that I.R.C. § 6234(a) is a nonjurisdictional claims-processing rule subject to equitable tolling, and that the IRS’s false representation, combined with returned certified mail, justified tolling the 16-day delay.
Taxpayer’s Cross-Motion to Dismiss for Lack of Jurisdiction: In the alternative, Kings Road moved to invalidate the FPA entirely, raising four distinct legal arguments:
- Improper Addressing: The FPA was invalid under I.R.C. § 6231(a) because it was addressed to “STE 212” rather than “Suite 212.”
- Lack of IRS Due Diligence: The IRS failed to exercise due diligence once the FPA was returned undelivered.
- Equitable Estoppel: The IRS should be equitably estopped from asserting valid mailing because its misleading statements prejudiced the partnership’s petition rights and its ability to execute a 45-day BBA “push-out” election under I.R.C. § 6226.
- Federal Vacancies Reform Act (FVRA) Defect: The FPA was null and void because it was signed by Acting Commissioner Melanie Krause, who the taxpayer claimed lacked statutory authority under 5 U.S.C. § 3345.

Court’s Analysis of the Law

Judge Buch, writing for the Tax Court, conducted a structured analysis of BBA statutory architecture, equitable doctrines, and administrative validity standards.

Nonjurisdictional Character of I.R.C. § 6234(a)

The court reiterated its prior precedent in Big Apple Tompkins Realty LLC v. Commissioner, 167 T.C. No. 11 (2026), establishing that the 90-day petition deadline in I.R.C. § 6234(a) is nonjurisdictional. Citing Boechler, P.C. v. Commissioner, 142 S. Ct. 1493 (2022), the court noted that statutory filing limits are presumed to be nonjurisdictional unless Congress clearly states otherwise.

Rebuttable Presumption of Equitable Tolling Under the BBA Framework

Under Holland v. Florida, 560 U.S. 631 (2010), nonjurisdictional deadlines enjoy a rebuttable presumption in favor of equitable tolling. The IRS argued that Congress intended to preclude equitable tolling in partnership tax cases, pointing to the court’s prior decision in North Wall Holdings, LLC v. Commissioner, 165 T.C. 143 (2025), which held that TEFRA petition deadlines under former I.R.C. § 6226 were jurisdictional and strictly barred equitable tolling.

Judge Buch explicitly distinguished the BBA from TEFRA, highlighting that the structural complexities that justified precluding equitable tolling under TEFRA do not exist under the BBA:

“The provision that governed filing a TEFRA petition in the Tax Court was section 6226(a) and (b) (TEFRA)... We found that the section 6226 (TEFRA) petition deadlines were ‘highly technical’ and ‘contained exceptions so that, where circumstances might require flexibility, that flexibility does not interfere with the TEFRA proceeding.’ ... But the administrative and practical burdens that led us to rebut the presumption in favor of equitable tolling for section 6226 (TEFRA) are simply not present for the BBA.”

The court emphasized that BBA procedures eliminated partner-level notice requirements, multi-tiered partner petition windows, and complex computational deficiency assessments that previously created operational “havoc” under TEFRA. Finding nothing in the text or structure of I.R.C. § 6234(a) to rebut the presumption, the court held that BBA petition deadlines are subject to equitable tolling.

Two-Prong Test for Equitable Tolling

To obtain equitable tolling, a taxpayer must satisfy two requirements established in Menominee Indian Tribe of Wisconsin v. United States, 577 U.S. 274 (2016):

That the taxpayer pursued its rights diligently; and
That extraordinary circumstances outside its control prevented timely filing.

Statutory Notice Mailing and Address Abbreviation Standards

Under I.R.C. § 6231(a) (flush language), an FPA is sufficient if mailed to the last known address of the partnership or partnership representative. The court affirmed that BBA notice provisions must be construed in pari materia with deficiency notice provisions under I.R.C. § 6212. Under established precedent (United States v. Goldston, 324 F. App’x 835 (11th Cir. 2009)), actual receipt by the taxpayer is immaterial; mailing to the last known address fulfills statutory requirements.

Refuting the taxpayer’s address argument, the court distinguished Wilson v. Commissioner, T.C. Memo. 1997-515 (involving transposed street numbers), and cited Kohilakis v. Commissioner, T.C. Memo. 1989-366, alongside USPS Publication 28 (Postal Addressing Standards), holding that common abbreviations such as “STE” for “Suite” do not invalidate statutory notices.

Requirements for Equitable Estoppel Against the Government

The court noted that equitable estoppel against the federal government faces an exceptionally high bar (Office of Personnel Management v. Richmond, 496 U.S. 414 (1990)). Under Eleventh Circuit law (United States v. McCorkle, 321 F.3d 1292 (11th Cir. 2003)) and Tax Court jurisprudence (Wilkins v. Commissioner, 120 T.C. 109 (2003)), estoppel requires affirmative misconduct, false representations, reasonable reliance, and severe detrimental effect.

Official Authority and Signature Validity Under the FVRA

Addressing the challenge to Acting Commissioner Melanie Krause’s authority under 5 U.S.C. § 3345, the court emphasized that:

Treasury Order 150-10 and IRS Delegation Order 1-23 (Rev. 1) delegate enforcement authority directly down through executive roles (including Chief Operating Officer and Deputy Commissioner) independent of FVRA acting status.
Under long-standing precedent (Clovis I v. Commissioner, 88 T.C. 980 (1987); Tavano v. Commissioner, 986 F.2d 1389 (11th Cir. 1993)), an FPA does not require a physical signature to be legally valid.

Application of the Law to the Facts

Applying these principles to Kings Road’s circumstances, the Tax Court systematically resolved each motion.

Application of Equitable Tolling

The court determined that Kings Road successfully satisfied both prongs of the Menominee test:

Diligence: Kings Road’s counsel actively monitored the case, calculated statutory deadlines using the NOPPA date, filed Forms 2848 promptly, and directly called the IRS to check FPA status. As Judge Buch observed:

“Kings Road satisfies the first element required to establish equitable tolling: It pursued its rights diligently... After being told by the IRS that no FPA had been mailed, Kings Road filed a petition with this Court. And the deadline chosen by petitioner’s counsel was reasonably calculated by using the only date in her possession, the date the NOPPA was issued.”
Extraordinary Circumstances: The court recognized that while returned mail alone might not suffice, the confluence of returned certified mail and affirmative IRS misinformation created an extraordinary barrier beyond the taxpayer’s control:

“Kings Road’s counsel called the IRS two months after the FPA was sent and was told no notice had been sent. The Eleventh Circuit has equitably tolled relevant statutes of limitations when there has not been ‘deliberate concealment’ but when ‘the claimant nevertheless has been misinformed.’ ... Although there are no facts to indicate that the FPA’s issuing date was deliberately concealed by the Commissioner, Kings Road was misinformed by the IRS when it was told a notice had not been sent, whereas in fact it had been sent months earlier.”

Accordingly, the court applied equitable tolling to deem Kings Road’s petition timely filed.

Rejection of Taxpayer’s Cross-Motion Issues

Proper Mailing: The court found that mailing to “100 BULL ST STE 212” satisfied I.R.C. § 6231(a). The NOPPA sent to the same abbreviation was delivered successfully, proving “STE” was not a defective address component.
Due Diligence and Returned Mail: Citing Estate of McKaig v. Commissioner, 51 T.C. 331 (1968), the court held that non-receipt of returned mail does not invalidate an otherwise properly addressed FPA.
Equitable Estoppel: Because equitable tolling cured the late petition, Kings Road suffered no prejudice regarding Tax Court access. Furthermore, the court noted Kings Road presented no evidence that it attempted a protective push-out election under I.R.C. § 6226 or that such administrative deadlines cannot be tolled.
FVRA Challenge: The court rejected the challenge to Acting Commissioner Krause, finding delegated statutory authority intact and noting that lack of a valid signature does not invalidate an FPA.

Conclusions of the Court

The Tax Court concluded its analysis with the following definitive holdings:

The 90-day petition deadline under I.R.C. § 6234(a) is nonjurisdictional and subject to equitable tolling.
The presumption of equitable tolling applies to BBA partnership proceedings because BBA statutory architecture lacks the operational complexities that barred tolling under TEFRA.
Kings Road established both continuous diligence and extraordinary circumstances stemming from IRS misinformation and returned mail, justifying equitable tolling of its petition.
The Commissioner’s Motion to Dismiss for Lack of Jurisdiction was denied, and the petition was deemed timely.
The FPA issued by the IRS was statutorily valid and properly mailed to the partnership’s last known address, rendering minor address abbreviations and FVRA signature challenges meritless.
Kings Road’s Cross-Motion to Dismiss for Lack of Jurisdiction was denied.

Prepared with assistance from Gemini Notebook.