Notice of Proceedings and Adjustments

ID:
UILC:
CCA_2024022715295410
6223B.00-00, 6231B.00-00
Number: 202417020
Release Date: 4/26/2024
From: ---
Sent: Tuesday, February 27, 2024 3:29:54 PM
To: ---
Cc: ---
Bcc:
Subject: Substantial Presence Test
Hi ---,
You have requested our assistance determining whether to treat the designation by a partnership (“PRS”) of a partnership representative (“PR”) for a taxable year (“TY”) as in effect, and, if it is, identifying the address to be used to mail the copy of the notice of administrative proceeding (“NAP”) for the PR.

# Facts

PRS designated PR as a partnership representative for purposes of section 6223 on
PRS’s partnership return for TY as provided in Treas. Reg. §301.6223-1(c)(2). PR has a
United States taxpayer identification number (“U.S. TIN”), and, in order to satisfy the requirements of Treas. Reg. §301.6223-1(b)(2) (the “substantial presence test”), PRS provided the PRS street address in the United States (“U.S. address”) and the PRS telephone number with a United States area code (“U.S. phone number”) for PR in connection with the designation. PR is a resident of a foreign country (“FC”) and files tax returns reflecting an address in FC, which is reflected in the Service’s records as the taxpayer’s last known address. PR was also a partner of PRS for TY, and PRS issued a Schedule K-1 for TY to PR at an address in FC.

# Issues

Based on the foregoing facts, you have asked:
1. May the Service treat the designation of PR as partnership representative for TY as in effect?
2. If so, what address should be used to mail the copy of the NAP for the TY to PR?
Summary of Conclusions
Based on the law and analysis discussed below:
1. The Service may treat the designation by PRS of PR as partnership representative for
TY as in effect.
2. The NAP will be sufficient if mailed to PR’s last known address, which we understand to appear on PR’s most recently filed and properly processed Federal tax return.

# Law and Analysis

2
1. May the Service treat the designation of PR as partnership representative for PRS for
TY as in effect?
Treas. Reg. §301.6223-1(b)(1) provides that a person designated under Treas. Reg.
§301.6223-1 as a partnership representative is deemed to be eligible to serve as the partnership representative unless and until the Service determines that the person is ineligible.
Treas. Reg. §301.6223-1(b)(4), Example 2, illustrates this concept by concluding that even though a U.S. address was not provided as required, until there is a resignation or revocation or until the Service determines the partnership representative designation is no longer in effect, the designation of the partnership representative remains in effect. Furthermore, Treas. Reg.
§301.6223-1(f)(2) provides that the Service may, but is not required to, determine that a partnership representative designation is not in effect. It elaborates that the IRS is not obligated to search for or otherwise seek out information related to the circumstances in which the Service may determine a partnership representative designation is not in effect, and the fact that the Service is aware of any such circumstances does not obligate the Service to determine that a partnership representative designation is not in effect. Thus, regardless of whether the substantial presence test is considered met by PR, the IRS can continue to deal with PR, rather than determining that a partnership representative designation is not in effect. See, e.g., Treas.
Reg. §301.6223-1(f)(6), Example 1. Consistent with the statement in IRM 4.31.9.7.6.6(2) that
“[i]t is a best practice for taxpayers to choose a representative who can best serve them,” we generally do not advise determining that a partnership representative designation is not in effect unless it is necessary, and thus would advise continuing to deal with PR, including by sending the NAP to PR, as discussed under question 2 below.
2. What address should be used to mail the copy of the NAP for TY to PR?
Section 6231(a) requires the Service to mail the NAP for TY to both PRS and PR. Consistent with the flush language in section 6231(a), Treas. Reg. §301.6231-1(c) provides that a NAP is sufficient if mailed to the last known address of the partnership representative and partnership.
Under Treas. Reg. §301.6212-2(a), the last known address is generally that which appears on the most recently filed and properly processed Federal tax return, unless the IRS is given clear and concise notification of a different address. See also Rev. Proc. 2010-16, section 5.03 (defining “address on return” as the address shown on the upper portion of the front page of a return). Accordingly, assuming the Service has not received notification of a different address, the address in FC that is reflected on PR’s tax returns is appropriately reflected in the Service’s records as PR’s last known address. The fact that PR gave PRS an address for purposes of Schedule K-1 mailing and PRS included such address on the Schedule K-1 issued to PR would not have resulted in notification of a different address for purposes of determining PR’s last known address. Therefore, under Treas. Reg. §301.6231-1(c), the NAP would be sufficient if mailed to the address in FC that is reflected on PR’s most recently filed and properly processed Federal tax return and accordingly in the Service’s records as PR’s last known address.
Please let us know if you have any additional questions.
Regards,
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