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IRS CAN'T USE ITS OWN TYPO AGAINST TAXPAYER
August 29, 2007
This took some nerve.
The IRS sent a notice of deficiency -- the proverbial "ticket to Tax Court" -- to to the partners of Petaluma FX Partners, LLC for an August 2000 taxable year-end. The tax notice partner filed a Tax Court petition based on the August year in the notice. Then the IRS told the Tax Court that the petition should be thrown out because it should have used a December tax year, rather than the August year in the IRS's own notice.
The Tax Court didn't go along:
In the case before us, respondent [IRS] made adjustments to partnership items for the correct taxable year of Petaluma, the calendar year ending December 31, 2000, yet notified the partners that those adjustments were for the taxable year ending August 31, 2000. The partners, however, could not have reasonably been misled by the error as Petaluma had no existence until the end of August 2000 and did not begin any business activities until October 10, 2000. There were no adjustments that respondent could have made to Petaluma with respect to a taxable year ending August 31, 2000.
The taxpayer lives to litigate another day.
Cite: Petaluma FX Partners LLC, T.C. Memo. 2007-254
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