Three ways a BBA case reaches Appeals
IRM 8.19.14.2.3 lists the three types of BBA disputes Appeals hears: cases with adjustments where the PR protested the 30-day letter, modification disputes, and docketed cases after an FPA is petitioned. All BBA key cases go first to the Appeals TEFRA/BBA Team, which screens them, prepares NOPPA, modification and FPA packages, and arranges the tax computations (IRM 8.19.14.2.1).
The one-hearing rule shapes strategy from the start: “Appeals will not reconsider a previous unagreed disputed tax issue if the case is later returned to Appeals for modification hearing. Appeals will hear the same issue only once for BBA cases regardless of substantive issues or modification issues.” Everything about the merits, the IU computation and penalties belongs in the protest.
Substantive issues: the 30-day letter route
The examiner issues the 30-day letter package (Letter 5891, Form 14791, Forms 886-A) only to the PR and only if enough statute remains. Technical Services must receive the case with at least 18 months left on the IRC 6235(a)(1) date, so the examiner issues the package with 20 months left or asks for Form 872-M (IRM 4.31.9.10.2). Appeals adds its own floor: “In general, all non-docketed BBA cases received by Appeals must have at least 365 days remaining on the statute of limitations.” Without an extension, the case closes for a NOPPA without Appeals consideration.
The protest can address any substantive issue, the IU amount and penalties, and must meet Publication 5 requirements. The examiner may rebut, and Technical Services reviews the protest and rebuttal before forwarding the case (IRM 4.31.9.11.4). If a protest is invalid and not perfected, the case goes forward without Appeals. Protest format is covered on formal protest letters. Fast Track Settlement and early referral are alternatives during the exam (IRM 4.31.9.9.5).
How Appeals works the case
An Appeals conference is generally offered in the Appeals office serving the area of the partnership's principal place of business. The Appeals officer deals only with the PR: “Partners are no longer considered parties under BBA. This is a departure from TEFRA where partners signed their own separate agreements.” A new Form 2848 is needed if the PR changes (IRM 8.19.14.2.5). General Appeals practice is covered on the Appeals conference and hazards of litigation settlements.
A settlement is documented on Form 14792-A, which fixes the treatment of partnership-related items. Whether or not the case settles, Appeals issues the NOPPA afterward: “The NOPPA will be issued by Appeals for all 30-day BBA letter cases in Appeals, whether or not a settlement is reached.” Signing Form 14792-A does not waive modification or the FPA (IRM 4.31.13.9.2). The NOPPA goes by certified mail to the partnership and PR, starting the 270-day modification period, and the case moves to BBA Operations in Ogden for everything after (IRM 8.19.14.2.6 and 8.19.14.4.6). If Appeals eliminates all adjustments, the case closes as a no-change with Letters 6099-B and 6099-D.
Modification disputes
After the NOPPA, the PR may request modification on Form 8980. If the PR disagrees with BBA Operations' determination on Form 15027, it can request a pre-Appeals conference with the BBA team manager and revenue agent, and then Appeals (IRM 4.31.13.9.3.1; IRM 8.19.14.5). Only the requested modifications are in play: the IRS's audit page says Appeals will only consider the modification determination and examination adjustments cannot be disputed at this stage.
The case goes to Appeals only if at least one year remains on the IRC 6235(a)(2) date, or the PR signs Form 872-M; otherwise the FPA issues. If Appeals changes the modification determination, Appeals prepares the FPA package and BBA Operations issues it. A signed Form 15027 with Form 14726 waives the FPA (IRM 8.19.14.5.6). See modification requests.
Petitioning after the FPA
IRC 6234(a) lets the partnership file a petition for readjustment within 90 days after the FPA is mailed, in the Tax Court, the district court for the partnership's principal place of business, or the Court of Federal Claims. A principal place of business outside the United States is treated as in the District of Columbia (IRC 6241(5)). IRM 8.19.14.7.2 sets out who and when:
- “Only the Partnership Representative (PR) can petition a court after issuance of an FPA.”
- “A petition must be filed within 90 days of the mailing of an FPA.”
- “A petition may be filed even if an alternative payment election under IRC 6226 has been made.”
The court's scope is broad. Under IRC 6234(c) it has jurisdiction to determine “all partnership-related items for the partnership taxable year to which the notice of final partnership adjustment relates, the proper allocation of such items among the partners, and the applicability of any penalty, addition to tax, or additional amount for which the partnership may be liable under this subchapter.” Because the IU is itself a partnership-related item, its computation is in scope. Once a petition is filed, the IRS may not issue another FPA for that year absent fraud, malfeasance or misrepresentation of a material fact (IRC 6231(c)). A dismissal, other than for rescission, is treated as a decision that the FPA is correct (IRC 6234(e)).
Assessment is barred while the case is pending, and premature assessment or collection can be enjoined, including by the Tax Court as to adjustments in a timely petition (IRC 6232(b) and (c)). General petition practice is on Tax Court petitions.
Tax Court partnership actions
The Tax Court's Title XXIV.A rules, Rules 255.1 through 255.7, govern BBA partnership actions. The key requirements:
| Rule | Requirement |
|---|---|
| 255.1(d) | Caption states the name of the partnership and the name of the partnership representative |
| 255.2(a) | The TIN given under Rule 20(b) is the partnership's EIN |
| 255.2(b) | Title: “Petition for Partnership Action Under BBA Section 1101” |
| 255.2(b)(1) to (5) | PR's name, residence or principal place of business, and address; statement that the partnership designated or the IRS selected the PR; partnership name and principal place of business; IRS office where returns were filed; FPA date; the IU and amount in controversy, including proposed modifications the IRS did not approve |
| 255.2(b)(6) | Clear and concise assignments of each error in the FPA and each unapproved proposed modification |
| 255.3 | Request for place of trial under Rule 140 |
| 255.6 | Court may establish the PR's identity, and may remove a PR for cause after notice and opportunity to be heard; the partnership then designates a successor |
| 255.7 | Decision binds the partnership and all its partners |
Rule 255.7 echoes IRC 6223(b): “A decision that the Court enters in a partnership action shall be binding on the partnership and on all of its partners.” Rules 255.1 to 255.7 make no provision for partners to participate or intervene, unlike the TEFRA procedures.
Docketed cases and settlements
After Counsel answers, a docketed BBA case can return to Appeals to settle substantive and modification disputes together (IRM 8.19.14.7.3.2). Appeals hears each issue only once even in docketed status. A settlement is computed on Form 15027, and Counsel prepares the stipulated decision. The PR signs it personally: “The PR is required to sign the stipulated decision document; the signature of the PR’s counsel is not acceptable by itself but may be added in addition to the PR’s signature.” Appeals may share a copy of the revised Form 15027 marked as not for signature to show the computation. The IRM adds that “Docketed EZ Close Procedures do not apply to BBA cases.” After the decision is final, the case goes to BBA Operations, which processes any push-out (the statements are due 60 days after the decision becomes final) or the assessment (IRM 4.31.13.9.3.3).
District court and Court of Federal Claims
A petition in district court or the Court of Federal Claims requires a deposit: the partnership must deposit, on or before the filing date, the IU and the related penalties, additions and additional amounts as shown in the FPA. The court may treat the requirement as met after a good faith attempt if any shortfall is timely corrected, and the deposit is not a payment of tax except for interest purposes (IRC 6234(b)). If the FPA has more than one IU, the deposit covers each IU the petition relates to. Appeals does not acquire jurisdiction of these cases (IRM 8.19.14.7.4). Refund litigation generally is covered on refund suits and claims.
Questions practitioners ask
Can a BBA partnership go to Appeals twice?
It can go once on substantive issues after the 30-day letter and once on a modification dispute after the modification determination, but Appeals hears each issue only once and will not reconsider a substantive issue at the modification stage.
Can individual partners file their own Tax Court petitions?
No. Only the partnership representative can petition after an FPA, and the decision binds the partnership and all partners. Partners cannot participate or intervene as they could under TEFRA.
What happens if there is not enough time on the statute for Appeals?
The examiner asks the PR to sign Form 872-M. Technical Services must receive the case with 18 months left and Appeals generally requires 365 days. Without an extension the case closes for a NOPPA without Appeals review.
Can we push out and still go to Tax Court?
Yes. IRM 8.19.14.7.2 says a petition may be filed even if a push-out election has been made. The push-out statements are then due 60 days after the court's decision becomes final.
Do we have to pay before going to court?
Not for Tax Court. A petition in district court or the Court of Federal Claims requires depositing the IU and related penalties shown in the FPA on or before filing.