PROCEDURALLY TAXING tax notes federal
by Jenni Black Jenni Black is a managing director in Citrin Cooperman’s national tax office and the practice leader of the tax procedure and controversy practice. She is also a contributing author for Procedurally Taxing. In this post, Black examines Jones Bluff, in which the Tax Court held that a partnership lacked standing to raise partners’ individual due process rights under the Bipartisan Budget Act of 2015. This post reflects the author’s personal views and not necessarily those of Citrin Cooperman. As with any “new” statute or regime, there is a time in the beginning1 during which many people challenge various aspects of the new statutes and regulations to discover the metes, bounds, and meaning of the new provisions. There’s been no shortage of this in the centralized partnership audit regime enacted by the Bipartisan Budget Act of 2015. There have been decisions regarding the requirements to make an 2 election into BBA, when everything required to be submitted for a modification request is “so 3 submitted,” who can settle partnership-related 4 items (and their tax consequences), and, more recently, whether BBA violates due process and,
therefore, any notice of final partnership adjustment is invalid.5 Many have viewed these cases as, largely, taxpayer “wins” (and, for the issues that have not concluded will be “taxpayer favorable” if the taxpayer is successful) but, are they really? Or could there be some unintended effects from these arguments and opinions? Are cases winning the battle but losing the war? In the end, will someone be saying (in a nasally voice) “Did I do that?” In this two-part post I’ll discuss the recent opinion in Jones Bluff and the potential impacts if a taxpayer were able to successfully argue that BBA violates due process. Part 1 will discuss the court’s opinion in Jones Bluff and part 2 will discuss what might happen if a partner’s due process argument was successful. Jones Bluff In the Jones Bluff case, petitioner moved for summary judgment, alleging the FPA issued by the IRS was invalid and, therefore, the period of limitations had run. Petitioner alleged the FPA was invalid because BBA deprives the individual partners of due process because, unlike under the 1982 Tax Equity and Fiscal Responsibility Act, the partners do not have notice and opportunity to be heard (that is, partners cannot file a petition, have no statutory rights to participate in the audit of the partnership, and are not entitled to notice from the IRS) before being allegedly being deprived of property (any tax the partners may be liable for if the partnership elected to push out the adjustments). BBA Flashback
1
Or, like with the 1982 Tax Equity and Fiscal Responsibility Act, we can all still be litigating what a partnership item is over 40 years later and even after it has been repealed. 2 3 4
Before moving on to the Tax Court’s decision in this case, let’s have a little refresher on BBA. Under BBA, unless the partnership makes a different
SN Worthington Holdings LLC v. Commissioner, 162 T.C. 228 (2024). JM Assets LP v. Commissioner, 165 T.C. No. 1 (2025). Arden Row Assets LLC v. Commissioner, T.C. Memo. 2025-71.
5
Jones Bluff LLC v. Commissioner, 166 T.C. No. 6 (2026).
TAX NOTES FEDERAL, VOLUME 191, JUNE 22, 2026 For more Tax Notes® Federal content, please visit www.taxnotes.com.
2261
© 2020 Tax Analysts. All rights reserved. Tax Analysts does not claim copyright in any public domain or third party content.
Did I Do That? Jones Bluff and Due Process Under BBA