§6232 Assessment, Collection, and Payment

Summary

The IRS must treat an imputed underpayment like a tax for the adjustment year and try to collect it the same way, but two rules are different: one usual collection procedure called subchapter B of chapter 63 does not apply, and if an administrative adjustment request under section 6227(b)(1) applies, the underpayment must be paid and can be assessed when that request is filed. No assessment, levy, or court collection may start before the 90th day after a notice of final partnership adjustment is mailed, and if the partnership files a petition under section 6234 the IRS must wait until the court’s decision is final. A court can stop any action that breaks those timing rules; the Tax Court can only do that if a timely 6234 petition was filed and only for the adjustments in that petition. If the IRS says a return has a math or clerical error, rules like those in section 6213(b) apply. A partnership can waive the 90-day waiting rule by signing and filing a written notice. If no 6234 case is started in the 90 days, the partnership’s liability is limited to the notice amount. If an imputed underpayment (or a defined “specified similar amount”) is not paid within 10 days after IRS demand, the interest rate changes by replacing “3 percentage points” with “5 percentage points,” and the IRS may assess each partner a tax equal to that partner’s share. Partners’ shares must add to 100%. Payments by a partner reduce the partnership’s liability. S corporations and their shareholders are treated the same as partnerships and partners. Assessments under the partner-collection rule must be made within 2 years after the IRS’s notice and demand.