In Big Apple Tompkins Realty LLC v. Commissioner, the Tax Court addressed a question of first impression: whether I.R.C. § 6234(a)’s 90-day petition filing deadline for partnerships subject to the Bipartisan Budget Act of 2015 (BBA) audit rules is jurisdictional. The IRS argued the deadline is jurisdiction, the Taxpayer said otherwise. Channeling its inner Bill Lumbergh, the IRS told the Taxpayer, “Yeah … I’m gonna need you to go ahead and have that petition filed by the deadline.” But the Court said “No.”
The court’s holding – § 6234(a)’s petition filing deadline is not jurisdictional – represents a significant development for BBA partnerships and tax practitioners. Despite the impact of the opinion, the Court left open the question of whether the statute is subject to equitable tolling.
Working against the clock: delayed FPA, late petition
The IRS issued a Notice of Final Partnership Adjustment (FPA) to Big Apple Tompkins Realty, LLC (Taxpayer) and its partnership representative (PR) which determined an imputed underpayment and a section 6662(d) accuracy-related penalty for tax year 2018. Although the FPA was dated August 11, 2022, the PR claimed he did not receive the FPA until November 2023 (i.e., more than 1 year later). On or around November 6, 2023, the PR filed a petition challenging the determinations in the FPA. The IRS moved to dismiss for lack of jurisdiction on the ground that the petition was not timely filed under I.R.C. §§ 6234(a) or 7502. The IRS attached a USPS Form 3877 (Firm Mailing Book for Accountable Mail) and two USPS Forms 3800 (Certified Mail Receipt) to its motion. But the IRS was unable to produce United States Postal Service (USPS) tracking information for the FPA. The Taxpayer objected stating that it promptly filed a petition after receiving the FPA in November 2023.
Beating the deadline: I.R.C. § 6234(a) is not jurisdictional
The court addressed two key questions: (1) whether the IRS properly mailed the FPA, and (2) whether the 90-day petition filing deadline under I.R.C. § 6234(a) is jurisdictional—meaning an untimely filing would strip the Tax Court of authority to hear the case.
The court started by determining the IRS bears the burden of proving “by competent and persuasive evidence,” the date the IRS mails an FPA. The court noted that the USPS Form 3877 was incomplete because it did not contain the number of articles received by USPS and was not signed by a USPS employee. As a result, the court found that the Form 3877 was insufficient to create a presumption of proper mailing. But the court noted that the IRS could prove the FPA’s mailing date by looking to additional evidence. Ultimately, the court held that the IRS proved the FPA’s mailing date by looking to the incomplete Form 3877 and the Forms 3800 which showed a date stamp of August 11, 2022, listed the Taxpayer’s and PR’s names and addresses that were also included on the Form 3877.
Turning to the jurisdictional issue, the court looked to the text of the statute and the BBA’s overall statutory scheme in holding that I.R.C. § 6234(a) is not jurisdictional.
I.R.C. § 6234(a)(1) provides that “[w]ithin 90 days after the date on which a [FPA] is mailed under section 6231 with respect to any partnership taxable year, the partnership may file a petition for a readjustment for such taxable year with the Tax Court[.]” In contrast, § 6234(b) explicitly uses the phrase “jurisdictional requirement” in both the title and the text of the statute. Based on that plain language, the court found that § 6234(a) contains only permissive, “mundane statute-of-limitations language,” while § 6234(b) explicitly delineates “jurisdictional requirements” suggesting Congress acted intentionally and purposely in excluding jurisdictional language from § 6234(a). Further, the court analyzed whether there is a “clear tie” between § 6234(c)’s grant of jurisdiction and § 6234(a)’s 90-day petition filing deadline. The court noted that § 6234(c) could plausibly be read to say that the court would not have jurisdiction to review partnership-related items where a petition is not timely filed under § 6234(a). Although that reading was plausible, the court did not find a clear tie because of Congress’s decision to use “far stronger jurisdictional language” in § 6234(b).
With respect to the BBA’s overall statutory scheme, the court compared the BBA to TEFRA and noted that TEFRA provided “distressingly complex and confusing” rules that blended the entity and aggregate theories of partnership tax. In contrast, the court said the BBA is designed to centralize all parts of the audit, assessment, and collection process at the partnership level. The court also distinguished the BBA’s statutory scheme by looking to North Wall Holdings, LLC v. Commissioner, 165 T.C. 143 (2025) where the court held that equitable tolling was not compatible with TEFRA’s assessment procedures. Unlike TEFRA where equitable tolling of the petition filing deadline “threatened administrative paralysis,” the court found it “only poses headaches under the BBA.”
After considering the plain text of the statute, the context, and history of § 6234(a), the court held that Congress “did not clearly state that the 90-day filing deadline is jurisdictional.” As a result, the court denied the IRS’s motion to dismiss, preserving jurisdiction despite the untimely petition. However, the court declined to rule on whether the 90-day deadline is subject to equitable tolling until the parties raise the issue.
What’s next: More TPS Reports (Motions)
The court’s opinion is good news for BBA partnerships in that a late petition may not necessarily close the door to Tax Court. But taxpayers and their advisors should monitor this case to see how (if at all) the court rules on the equitable tolling issue.
Questions about BBA audit rules, a Notice of Final Partnership Adjustment, or Tax Court petitions? Contact Adam R. Young— because when it comes to protecting your right to challenge IRS adjustments, the best time to act is now.
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