Monday, March 13, 2023

Full 9th Circ. Decided that Filing a Return With a Revenue Agent is Not a Filing That Starts the Statute of Limitations


On May 13, 2021 we posted 9th Cir Reverses Tax Court's Finding That Return Supplied During an IRS Examination is Not a Filed Return where we discussed that the Tax Court had concluded that the signed copy of the Form 1065 faxed to agent was not a return under the Beard test, See Beard v. Commissioner, 82 T.C. 766, 777 (1984), the 9th Circuit went on to analyze this issue. The 9th Circuit found that the Form 1065 that Seaview faxed to agent met all the Beard criteria and therefore was a return. 

Now according to Law360, the full Ninth Circuit ruled on March 10, 2023 that the IRS timely disallowed a partnership's $35.5 million loss as the partnership's failure to strictly comply with filing rules meant the agency's readjustment deadline didn't pass, overruling a three-judge panel.

The Ninth Circuit majority ruled that the Tax Court was correct in finding that the IRS' 2010 tax adjustment was timely because of Seaview's failure to comply with Treasury Regulation Section 1.6031(a)-1(e)(1) 

Under that regulation, Seaview was required to send its returns to a service center in Utah, rather than providing copies of those returns to an IRS agent and attorney, the majority said.

"Because Seaview Did Not Meticulously Comply With The Regulation's Place-For-Filing Requirement, It Is Not
Entitled To Claim The Benefit of The Three-Year
Limitations Period," The Opinion Said.

"Having never properly filed its return, Seaview is instead subject to the provision allowing taxes attributable to partnership items to be assessed 'at any time.'"

But U.S. Circuit Judge Patrick J. Bumatay disagreed. The IRS has long encouraged taxpayers to file untimely returns with IRS officials who ask for them, and the majority's decision "throws our tax system into disarray" as "taxpayers can no longer trust what the IRS has told them about how to file delinquent tax returns," Judge Bumatay said.

"Based on the ordinary meaning of 'filing,' we should have held that a delinquent partnership return is 'filed' when an IRS official authorized to obtain and process a delinquent return asks a partnership for such a return, the partnership delivers the return to the IRS official in the manner requested, and the IRS official receives the return," Judge Bumatay added.

The Ninth Circuit case focused on what constitutes a tax return that is properly filed with the IRS. The three-judge panel said in its May decision that copies of returns the partnership gave the agency in 2005 and 2007 constituted filings of those returns that kicked off the three-year statute of limitations under Internal Revenue Code Section 6229(a).

Internal guidance at the IRS contradicts the agency's assertions that the partnership's returns had to be filed with the Utah service center for them to be treated as having kick-started the statute of limitations, the three-judge panel found.

But the Ninth Circuit majority disagreed that IRS documents cited by Seaview support its arguments that its returns were properly filed. Moreover, the partnership misses the mark in arguing that the place-of-filing rules apply only to timely filings, as the regulation's "place-for-filing requirement contains no carveout for delinquent returns," the majority said.

As U.S. Circuit Judge Bridget S. Bade said in her dissent in the panel decision, "nothing in the text of the regulation indicates that compliance with the place-for-filing requirement is conditioned upon compliance with the time-for-filing requirement, such that filing at the designated place somehow becomes optional whenever a taxpayer files its return late," the majority added.

Have an IRS Tax Problem?

     Contact the Tax Lawyers at

Marini & Associates, P.A. 

for a FREE Tax HELP Contact us at: or
Toll Free at 888 8TAXAID (888-882-9243)


  1. While Seaview gave copies of its return to the RA and later to a Chief Counsel attorney, neither of the individuals to whom it gave a return forwarded the 2001 return to Ogden and Seaview also did not send a return to Ogden during this period. In October 2010, the IRS issued a notice of final partnership adjustment disallowing a $35 million loss claimed on the 2001 return. In Tax Court, Seaview conceded it was not entitled to the claimed loss and limited its argument to the timeliness of the notice because it came too late after Seaview hand delivered the returns to the RA and the Chief Counsel attorney. The Tax Court rejected Seaview’s argument, but it prevailed at the 9th Circuit panel garnering two votes of the three panel members.
    One judge, Judge Bumatay who served on the panel that overturned the Tax Court decision, dissented. He finds the manual provision and other actions of the IRS regarding returns to effectively override the strict language of the regulation. He minces no words in criticizing the decision of the majority:
    What makes our court’s decision most perplexing is that the IRS’s public guidances about filing delinquent tax returns with requesting officials adheres to the Tax Code and IRS regulations. The Tax Code only requires filing a return as the IRS “may prescribe in regulations.” 26 U.S.C. § 6230(i) (repealed 2015) (emphasis added). But here, the IRS has promulgated no regulation on how partnerships must file “delinquent” returns. In such cases, we follow the plain meaning of “filing.” And, as the IRS has previously concluded, sending a delinquent return to a requesting IRS official fits with the plain meaning of the term. So the IRS’s public statements about filing delinquent returns with an IRS representative follows the law, and we should have held the IRS to its promises. Instead, our court lets the IRS “speak[] out of both sides of its mouth.”

    The dissent goes on for several more pages explaining why Judge Bumatay finds the IRS position in this case inconsistent with the IRC, the regs and its internal guidance. The reason the Tax Clinic wrote an amicus brief supporting a well-heeled, well represented partnership that invested in a tax shelter is captured by the bolded section of the final quote. The regulation should not be viewed in a vacuum. If an IRS employee solicits a return in their official capacity and a taxpayer remits the return, the taxpayer should be allowed to rely on that remittance as a filing even if the IRS employee does not follow the IRM and forward a copy of the return to the appropriate Service Center.

  2. Supreme Court Petition: When Is a Return Filed for Limitations Purposes

    Seaview Trading LLC has asked the Supreme Court to review the Ninth Circuit's holding that delivering a return to an IRS agent isn't an official filing for purposes of the statute of limitations. (Seaview Trading, LLC, Docket No. 23-125)

    However, the Tax Court found that Dingman didn't apply because Seaview didn't intend to file a return when it submitted its 2001 return to the IRS' employees. This lack of intent was evidenced by its claim that it had filed the return in 2002 and the documents submitted to the IRS' employees were "copies." In Dingman, the Tax Court said, the taxpayer clearly intended the returns they submitted to the Criminal Investigation Division to be delinquent returns with payments. See Faxing return to IRS agent was not proper filing (09/24/2019).

    Seaview first won then lost on appeal. On appeal to the Ninth Circuit, the panel judges reversed and remanded the Tax Court's decision (129 AFTR 2d 2022-1757). But the panel's decision was vacated after the IRS filed petition for review en banc (130 AFTR 2d 2022-6401).

    Ninth Circuit's final word. After more litigation, the majority of the Ninth Circuit found that the IRS wasn't barred by the limitations period from adjusting the partnership's 2001 tax liability because the 2001 submission was never properly filed at a service center. According to the Ninth Circuit, Seaview didn't file its return with a designated service center as required by the regulations; thus, it never filed the 2001 return at all. See Limitations Period Did Not Bar IRS from Partnership Tax Liability Readjustment Since Return Never Properly Filed (03/31/2023)

    The IRS had the authority to promulgate the regulation (Reg. §1.6031(a)-1(e)), the Ninth Circuit said, because Congress has not spoken directly to the issue of where returns should be filed. And it was reasonable for the IRS to require all returns to be filed at a designated service center.

    The dissent, however, found that the reg wasn't specific enough and was contradicted by the IRS' other public guidance on the issue. In fact, the dissent noted, various forms of subregulatory public guidance contradicts the IRS' position in Seaview. The dissent also took issue with the majority reading the two paragraphs of the regulation separately arguing that the two paragraphs must be read together, and both only apply to timely filed returns.

    Request for Supreme Court review. Seaview filed its request for Supreme Court review on August 9, 2023. The petition asks the Court to clarify whether a late-filed return is "filed" when it is submitted to an IRS employee who requests it.