Field Attorney Advice 20162901F points out that even adjustments that take the position that a purported TEFRA partnership was not actually a partnership or that certain individuals weren’t partners still has the statute of limitations for tax against the partners potentially lengthened by the TEFRA partnership statute of limitations found at IRC §6229.

The implications of the provision found in IRC §6501(c) regarding the statute of limitation on assessing tax when the IRS is faced with a fraudulent tax return is generating much action and disagreement among the courts about exactly whose fraudulent intent can trigger the extended statute and what the nature of such a fraud must be to do so.  Since triggering §6501(c) gives the IRS an unlimited period of time in which to assess the tax, the matter is one of true concern if, truly, a taxpayer may find him/herself stuck with the statute due to a fraud committed that they weren’t aware of.