Tax Court In Brief | Pettennude v. Commissioner | A Warning To All Tax Matters Partners Under TEFRA

• Published date: 25 July 2022
• Subject Matter: Tax, Income Tax, Tax Authorities
• Law Firm: Freeman Law
• Author: Freeman Law

The Tax Court in Brief - July 18th - July 22nd, 2022

Freeman Law's "The Tax Court in Brief" covers every substantive Tax Court opinion, providing a weekly brief of its decisions in clear, concise prose.

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Tax Litigation: The Week of July 18th, 2022, through July 22nd, 2022

• Gonzalez v. Comm'r, T.C. Summary Opinion 2022-13 | July 18, 2022 | Panuthos, J. | Dkt. No. 1548-19S
• Soler v. Comm'r, T.C. Memo. 2022-78 | July 18, 2022 | Marvel, J. | Dkt. No. 18639-19

Pettennude v. Comm'r, T.C. Memo. 2022-79 | July 18, 2022 | Buch, J. | Dkt. No. 636-21L

Opinion

Short Summary: Trevor Pettennude ("Petitioner"), an entrepreneur, invested in Ecotec Coal, LLC ("Ecotec"). In 2006, Ecotec, which had over 100 partners, claimed certain credits, pursuant to I.R.C. ' 45, carried most of the credits forward to later tax years, and solicited capital contributions in exchange for coal credits. The IRS examined Ecotec's partnership returns for tax years 2008 through 2011. Following TEFRA procedures, the IRS issued Ecotec's tax matters partner ("TMP") notices of Final Partnership Administrative Adjustment ("FPAAs") for 2008 through 2011, disallowing the claimed coal credits. The IRS did not send copies of the FPAAs to Petitioner. Ecotec filed Tax Court petitions for the tax years at issue, and in 2017, the Tax Court entered stipulated decisions wherein the parties agreed that Ecotec was not entitled to the coal credits in tax years 2008 through 2011. Accordingly, the IRS adjusted Petitioner's individual income tax returns for tax years 2009 through 2011, resulting in additional taxes of $812,885 and $27,289 for tax years 2009 and 2011, respectively.

The IRS subsequently issued to Petitioner a Notice of Intent to Levy related to tax years 2009 and 2011. Petitioner timely requested a CDP hearing, challenging the underlying tax liabilities but not proposing any collection alternatives. Petitioner's attorney participated in the CDP hearing with the assigned IRS settlement officer. Petitioner never provided the documents required to consider collection alternatives, and the settlement officer determined the collection action was appropriate. Petitioner timely filed a petition with the Tax Court, challenging only the underlying liabilities. The IRS subsequently filed a motion for summary judgment.

Key Issues:

• (1) Whether Petitioner may challenge his underlying...