Linvel Bingham v. USA
843 F.3d 181
| 5th Cir. | 2016Background
- In the 1980s the plaintiffs (Rodgers, Steins, Hollands, Binghams) invested in AMCOR partnerships and claimed tax losses on individual returns; the IRS investigated and issued FPAA adjustments in 1991.
- The IRS asserted extensions of the §6501 assessment period under TEFRA §6229 (e.g., alleged invalid partnership return for AVA; Forms 872-P signed by TMPs for other partnerships).
- Partners settled with the IRS in the late 1990s, paid additional tax and interest, then filed administrative refund claims alleging assessments were time-barred; they did not assert a §6230(a)(2)(A)(i) notice-of-deficiency theory in those claims.
- The IRS denied (or failed to act on) the refund claims, citing 26 U.S.C. §7422(h) (TEFRA limits) and appellant plaintiffs sued in district court for refunds; district courts granted summary judgment to the Government.
- On appeal the Fifth Circuit affirmed, holding district courts lack jurisdiction over refund claims attributable to partnership items and that the variance doctrine bars plaintiffs’ notice-of-deficiency theory; alternatively, the deficiency claim fails on the merits.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Jurisdiction over statute-of-limitations challenge | Plaintiffs: IRS assessed after §6501 expired; district court can hear refund claim | Government: IRS relied on §6229 (a partnership item) to extend §6501; §7422(h) bars partner-level refund suits | District courts lack jurisdiction under §7422(h); affirm (Irvine controls) |
| Validity of §6229 extensions | Plaintiffs: TMP extensions invalid / some partnership returns never valid; they were barred from joining Tax Court previously | Government: §6229 extensions were asserted and such partnership-item questions must be litigated at partnership level | Court will not adjudicate merits of §6229 extensions in partner-level refund suit (jurisdictional bar) |
| Requirement of notice of deficiency (§6230(a)(2)(A)(i)) | Plaintiffs: deficiency notices required because alleged deficiency rooted in untimely assessment (an affected item requiring partner-level determinations) | Government: resolving notice question would require relitigating §6229 partnership items; alternatively, plaintiffs failed to raise this ground administratively (variance doctrine) | Notice-of-deficiency claim barred by §7422(h) and, alternatively, by the variance doctrine; also fails on the merits if reached |
| Pleading/variance doctrine | Plaintiffs: their administrative claims’ general statute-of-limitations language encompassed the deficiency-notice theory | Government: regulation requires detailed grounds; plaintiffs did not present the deficiency theory to IRS, so it is barred | Variance doctrine applies; plaintiffs failed to present deficiency theory administratively, so cannot raise it in refund suit |
Key Cases Cited
- Irvine v. United States, 729 F.3d 455 (5th Cir.) (TEFRA §7422(h) bars partner-level refund claims when government asserts §6229 extensions)
- Curr-Spec Partners, L.P. v. Commissioner of Internal Revenue, 579 F.3d 391 (5th Cir.) (§6229 does not create independent FPAA statute; it can extend §6501)
- Duffie v. United States, 600 F.3d 362 (5th Cir.) (partnership-item determinations can preclude partner-level refund jurisdiction)
- Weiner v. United States, 389 F.3d 152 (5th Cir.) (§6229 assessment period is a partnership item)
- El Paso CGP Co. v. United States, 748 F.3d 225 (5th Cir.) (variance doctrine requires refund ground be raised administratively)
- Woods v. United States, 134 S. Ct. 557 (U.S. Supreme Court) (overview of TEFRA partnership/procedural scheme)