
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC6226]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                Subtitle F--Procedure and Administration
 
                         CHAPTER 63--ASSESSMENT
 
            Subchapter C--Tax Treatment of Partnership Items
 
Sec. 6226. Judicial review of final partnership administrative 
        adjustments
        

(a) Petition by tax matters partner

    Within 90 days after the day on which a notice of a final 
partnership administrative adjustment is mailed to the tax matters 
partner, the tax matters partner may file a petition for a readjustment 
of the partnership items for such taxable year with--
        (1) the Tax Court,
        (2) the district court of the United States for the district in 
    which the partnership's principal place of business is located, or
        (3) the Court of Federal Claims.

(b) Petition by partner other than tax matters partner

                           (1) In general

        If the tax matters partner does not file a readjustment petition 
    under subsection (a) with respect to any final partnership 
    administrative adjustment, any notice partner (and any 5-percent 
    group) may, within 60 days after the close of the 90-day period set 
    forth in subsection (a), file a petition for a readjustment of the 
    partnership items for the taxable year involved with any of the 
    courts described in subsection (a).

                (2) Priority of the Tax Court action

        If more than 1 action is brought under paragraph (1) with 
    respect to any partnership for any partnership taxable year, the 
    first such action brought in the Tax Court shall go forward.

                 (3) Priority outside the Tax Court

        If more than 1 action is brought under paragraph (1) with 
    respect to any partnership for any taxable year but no such action 
    is brought in the Tax Court, the first such action brought shall go 
    forward.

                   (4) Dismissal of other actions

        If an action is brought under paragraph (1) in addition to the 
    action which goes forward under paragraph (2) or (3), such action 
    shall be dismissed.

                (5) Treatment of premature petitions

        If--
            (A) a petition for a readjustment of partnership items for 
        the taxable year involved is filed by a notice partner (or a 5-
        percent group) during the 90-day period described in subsection 
        (a), and
            (B) no action is brought under paragraph (1) during the 60-
        day period described therein with respect to such taxable year 
        which is not dismissed,

    such petition shall be treated for purposes of paragraph (1) as 
    filed on the last day of such 60-day period.

                (6) Tax matters partner may intervene

        The tax matters partner may intervene in any action brought 
    under this subsection.

(c) Partners treated as parties

    If an action is brought under subsection (a) or (b) with respect to 
a partnership for any partnership taxable year--
        (1) each person who was a partner in such partnership at any 
    time during such year shall be treated as a party to such action, 
    and
        (2) the court having jurisdiction of such action shall allow 
    each such person to participate in the action.

(d) Partner must have interest in outcome

                 (1) In order to be party to action

        Subsection (c) shall not apply to a partner after the day on 
    which--
            (A) the partnership items of such partner for the 
        partnership taxable year became nonpartnership items by reason 
        of 1 or more of the events described in subsection (b) of 
        section 6231, or
            (B) the period within which any tax attributable to such 
        partnership items may be assessed against that partner expired.

    Notwithstanding subparagraph (B), any person treated under 
    subsection (c) as a party to an action shall be permitted to 
    participate in such action (or file a readjustment petition under 
    subsection (b) or paragraph (2) of this subsection) solely for the 
    purpose of asserting that the period of limitations for assessing 
    any tax attributable to partnership items has expired with respect 
    to such person, and the court having jurisdiction of such action 
    shall have jurisdiction to consider such assertion.

                        (2) To file petition

        No partner may file a readjustment petition under subsection (b) 
    unless such partner would (after the application of paragraph (1) of 
    this subsection) be treated as a party to the proceeding.

(e) Jurisdictional requirement for bringing action in district court or 
        Court of Federal Claims

                           (1) In general

        A readjustment petition under this section may be filed in a 
    district court of the United States or the Court of Federal Claims 
    only if the partner filing the petition deposits with the Secretary, 
    on or before the day the petition is filed, the amount by which the 
    tax liability of the partner would be increased if the treatment of 
    partnership items on the partner's return were made consistent with 
    the treatment of partnership items on the partnership return, as 
    adjusted by the final partnership administrative adjustment. In the 
    case of a petition filed by a 5-percent group, the requirement of 
    the preceding sentence shall apply to each member of the group. The 
    court may by order provide that the jurisdictional requirements of 
    this paragraph are satisfied where there has been a good faith 
    attempt to satisfy such requirements and any shortfall in the amount 
    required to be deposited is timely corrected.

                        (2) Refund on request

        If an action brought in a district court of the United States or 
    in the Court of Federal Claims is dismissed by reason of the 
    priority of a Tax Court action under paragraph (2) of subsection 
    (b), the Secretary shall, at the request of the partner who made the 
    deposit, refund the amount deposited under paragraph (1).

                        (3) Interest payable

        Any amount deposited under paragraph (1), while deposited, shall 
    not be treated as a payment of tax for purposes of this title (other 
    than chapter 67).

(f) Scope of judicial review

    A court with which a petition is filed in accordance with this 
section shall have jurisdiction to determine all partnership items of 
the partnership for the partnership taxable year to which the notice of 
final partnership administrative adjustment relates, the proper 
allocation of such items among the partners, and the applicability of 
any penalty, addition to tax, or additional amount which relates to an 
adjustment to a partnership item.

(g) Determination of court reviewable

    Any determination by a court under this section shall have the force 
and effect of a decision of the Tax Court or a final judgment or decree 
of the district court or the Court of Federal Claims, as the case may 
be, and shall be reviewable as such. With respect to the partnership, 
only the tax matters partner, a notice partner, or a 5-percent group may 
seek review of a determination by a court under this section.

(h) Effect of decision dismissing action

    If an action brought under this section is dismissed (other than 
under paragraph (4) of subsection (b)), the decision of the court 
dismissing the action shall be considered as its decision that the 
notice of final partnership administrative adjustment is correct, and an 
appropriate order shall be entered in the records of the court.

(Added Pub. L. 97-248, title IV, Sec. 402(a), Sept. 3, 1982, 96 Stat. 
653; amended Pub. L. 97-448, title III, Sec. 306(c)(1)(A), Jan. 12, 
1983, 96 Stat. 2406; Pub. L. 102-572, title IX, Sec. 902(b)(2), Oct. 29, 
1992, 106 Stat. 4516; Pub. L. 105-34, title XII, Secs. 1238(b)(1), 
1239(b), 1240(a), Aug. 5, 1997, 111 Stat. 1026-1028.)


                               Amendments

    1997--Subsec. (b)(5), (6). Pub. L. 105-34, Sec. 1240(a), added par. 
(5) and redesignated former par. (5) as (6).
    Subsec. (d)(1). Pub. L. 105-34, Sec. 1239(b), inserted concluding 
provisions.
    Subsec. (f). Pub. L. 105-34, Sec. 1238(b)(1), substituted 
``relates,'' for ``relates and'' and inserted ``, and the applicability 
of any penalty, addition to tax, or additional amount which relates to 
an adjustment to a partnership item'' before period at end.
    1992--Subsecs. (a)(3), (e), (g). Pub. L. 102-572 substituted ``Court 
of Federal Claims'' for ``Claims Court'' wherever appearing.
    1983--Subsec. (g). Pub. L. 97-448 substituted ``With respect to the 
partnership, only the tax matters partner'' for ``Only the tax matters 
partner''.


                    Effective Date of 1997 Amendment

    Amendment by section 1238(b)(1) of Pub. L. 105-34 applicable to 
partnership taxable years ending after Aug. 5, 1997, see section 1238(c) 
of Pub. L. 105-34, set out as a note under section 6221 of this title.
    Amendment by section 1239(b) of Pub. L. 105-34 applicable to 
partnership taxable years ending after Aug. 5, 1997, see section 1239(f) 
of Pub. L. 105-34, set out as a note under section 6225 of this title.
    Section 1240(b) of Pub. L. 105-34 provided that: ``The amendment 
made by this section [amending this section] shall apply to petitions 
filed after the date of the enactment of this Act [Aug. 5, 1997].''


                    Effective Date of 1992 Amendment

    Amendment by Pub. L. 102-572 effective Oct. 29, 1992, see section 
911 of Pub. L. 102-572, set out as a note under section 171 of Title 28, 
Judiciary and Judicial Procedure.


                    Effective Date of 1983 Amendment

    Amendment by Pub. L. 97-448 effective as if included in the 
provisions of the Tax Equity and Fiscal Responsibility Act of 1982, Pub. 
L. 97-248, to which such amendment relates, see section 311(d) of Pub. 
L. 97-448, set out as a note under section 31 of this title.

                  Section Referred to in Other Sections

    This section is referred to in sections 6223, 6225, 6228, 6229, 
6230, 6234, 7451, 7459, 7482, 7485 of this title; title 28 sections 
1346, 1508.
