Tax Court Holds TEFRA Petition Deadline a Jurisdictional Requirement

(Parker Tax Publishing November 2025)

The Tax Court held that the 150-day deadline in Code Sec. 6226(b) for a notice partner in a TEFRA proceeding to file a petition seeking readjustments of a final partnership administrative adjustment (FPAA) under Code Sec. 6226(b) is a jurisdictional requirement. The court also held that the complexity of the TEFRA provisions does not allow for equitable tolling of the petition deadlines in Code Sec. 6226. North Wall Holdings, LLC v. Comm'r, 165 T.C. No. 9 (2025).

Background

North Wall Holdings, LLC (North Wall) is an Alabama limited liability company with its principal place of business in Atlanta, Georgia. Schuler Investments, LLC (Schuler) is a Georgia limited liability company and a partner of North Wall. Schuler was a notice partner of North Wall for the tax year ending December 31, 2017.

On May 6, 2021, the IRS mailed to North Wall's tax matters partner (TMP) a Notice of Final Partnership Administrative Adjustment (FPAA) disallowing a claimed noncash charitable contribution deduction of $45,800,000 for 2017 and determining the applicability of penalties under Code Secs. 6662A and 6662(c) - (e) and (h). The IRS sent both a notice addressed to a named TMP and a "generic" notice addressed to "Tax Matters Partner," to two different addresses. On June 1, 2021, the IRS mailed copies of the FPAA to other partners, including Schuler.

The Tax Equity and Fiscal Responsibility Act (TEFRA) was enacted in 1982 to provide unified partnership audit and litigation procedures. TEFRA was repealed by the Bipartisan Budget Act of 2015 (BBA). The BBA generally applies to returns filed for tax years beginning after December 31, 2017. Thus, the TEFRA rules applied to the year at issue in this case. Under TEFRA Code Sec. 6226(a), a TMP may file a petition for readjustment within 90 days of the IRS's mailing of an FPAA to the TMP. TEFRA Code Sec. 6226(b)(1) provides that a notice partner may file a petition within 60 days after the close of the 90-day TMP petition period. In other words, a notice partner has 150 days from the mailing of the FPAA to the TMP to file a petition.

North Wall's TMP did not file a petition challenging the FPAA within 90 days of the mailing of the FPAA or at any other time. Schuler, in its capacity as a notice partner, filed a petition on October 21, 2021. Schuler's petition stated that the IRS issued the FPAA on June 1, 2021. It made no reference to the date the FPAA was mailed to the TMP. The petition was electronically filed 168 days after the FPAA was mailed to the TMP, i.e., 18 days after the expiration of the 150-day deadline for notice partners. Schuler did not allege in its petition that equitable tolling applied, and it did not allege facts in support of equitable tolling in any pleading.

The IRS filed a motion to dismiss, arguing that the Tax Court lacked jurisdiction because Schuler filed its petition after the deadline set forth in Code Sec. 6226(b). Schuler objected, contending that the deadline to file a petition from an FPAA is not jurisdictional and is subject to equitable tolling.

Jurisdictional vs. Claims Processing Rules

If a federal court's subject-matter jurisdiction depends on the timely filing of a complaint or petition, a litigant's failure to comply with the deadline deprives the court of authority to hear the case. Claims processing rules, on the other hand, are rules that promote the orderly progress of litigation by requiring parties to take certain procedural steps at certain specified times. The failure to meet a claims processing rule does not deprive a court of jurisdiction over a case.

In the early 2000s, the Supreme Court endeavored to "bring some discipline" to the courts' use of the jurisdictional label. In Arbaugh v. Y & H Corp., 546 U.S. 500 (2006), the Court held that Congress must "clearly state" that a filing deadline is jurisdictional, and absent such a clear statement, "courts should treat the restriction as nonjurisdictional in character." The traditional tools of statutory construction, the Court instructed, must "plainly show" that Congress intended the deadline to have jurisdictional consequences.

In the tax area specifically, the Supreme Court has twice considered whether a particular deadline was subject to equitable tolling. In U.S. v. Brockamp, 519 U.S. at 347 (1997), the Supreme Court considered whether the deadline by which to file a refund claim is subject to equitable tolling, concluding that Congress did not intend for equitable tolling to apply to the deadline for filing claims for refund. In Boechler, P.C. v. Comm'r, 2022 PTC 112 (S. Ct. 2022), the Supreme Court considered whether the deadline by which to file a petition challenging a collection determination by the IRS is subject to equitable tolling, concluding that it is.

Tax Court's Analysis

The Tax Court held that 150-day deadline to file a petition seeking a readjustment of adjustments in an FPAA is jurisdictional and is not subject to equitable tolling. The court therefore granted the IRS's motion to dismiss.

In the court's view, the multiple deadlines within TEFRA Code Sec. 6226 coordinate so as to make a "clear statement" that the deadlines are jurisdictional. The court observed that the FPAA in a TEFRA proceeding is similar to a notice of deficiency, and the court said that both are prerequisites to the court's jurisdiction. Like Code Sec. 6213(a), Code Sec. 6226(a) and (b) include the requirement of a jurisdictional notice in the same sentence as (and thus are "linked" to ) the petition periods for their respective petitions. The also found it notable that the language of Code Sec. 6226(b)(1) places the 150-day timing requirement between the words "may" and "file."

In addition, the court found that treating TEFRA petition deadlines as nonjurisdictional would create serious administrative problems and nullify the TEFRA coordination provisions enacted by Congress. The court explained that the administrative problems are magnified in TEFRA proceedings because the proceedings affect multiple parties, ranging from two to thousands. For example, the court said that equitable tolling could result in an untimely petition in the Tax Court divesting another court of jurisdiction. The court added that the process for assessment and collection of deficiencies resulting from a TEFRA proceeding would be rendered unworkable if equitable tolling were allowed.

Even setting aside the question of jurisdiction, the court found that the complexity of the TEFRA provisions leaves no room for equitable tolling of the petition deadlines in Code Sec. 6226. Equitably tolling the TEFRA petition deadline would, in the court's view, be fundamentally incongruent with the statutory scheme and upend the entire assessment process that TEFRA was intended to streamline. The court reasoned that TEFRA petition deadlines are highly technical and contain exceptions so that, where circumstances might require flexibility, that flexibility does not interfere with the TEFRA proceeding. According to the court the complexity of the TEFRA deadlines cannot easily be read to allow for implicit exceptions.

Finally, the court observed that the rationale for equitable tolling in the deficiency petition context does not apply to TEFRA petitions. In Buller v. Comm'r, 2025 PTC 278 (2d Cir. 2025), the Second Circuit characterized the deficiency deadline of Code Sec. 6213 as appearing in a section of the Code that is "unusually protective of taxpayers." The court said that in contrast, TEFRA removes a partner's unique circumstances from the partnership-level proceeding and determines items at the partnership level. The court concluded that in unifying partnership-level proceedings rather than focusing on the specifics of any one partner, TEFRA was not intended to be "unusually protective of taxpayers."

For a discussion of the TEFRA audit procedures, see Parker Tax ¶28,505.

Disclaimer: This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer. The information contained herein is general in nature and based on authorities that are subject to change. Parker Tax Publishing guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. Parker Tax Publishing assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein.

Parker Tax Pro Library - An Affordable Professional Tax Research Solution. www.parkertaxpublishing.com

We hope you find our professional tax research articles comprehensive and informative. Parker Tax Pro Library gives you unlimited online access all of our past Biweekly Tax Bulletins, 22 volumes of expert analysis, 250 Client Letters, Bob Jennings Practice Aids, time saving election statements and our comprehensive, fully updated primary source library.

Try Our Easy, Powerful Search Engine

A Professional Tax Research Solution that gives you instant access to 22 volumes of expert analysis and 185,000 authoritative source documents. But having access won’t help if you can’t quickly and easily find the materials that answer your questions. That’s where Parker’s search engine – and it’s uncanny knack for finding the right documents – comes into play

Things that take half a dozen steps in other products take two steps in ours. Search results come up instantly and browsing them is a cinch. So is linking from Parker’s analysis to practice aids and cited primary source documents. Parker’s powerful, user-friendly search engine ensures that you quickly find what you need every time you visit Our Tax Research Library.

Dear Tax Professional,

My name is James Levey, and a few years back I founded a company named Kleinrock Publishing. I started Kleinrock out of frustration with the prohibitively high prices and difficult search engines of BNA, CCH, and RIA tax research products ... kind of reminiscent of the situation practitioners face today.

Now that Kleinrock has disappeared into CCH, prices are soaring again and ease-of-use has fallen by the wayside. The needs of smaller firms and sole practitioners are simply not being met.

To address the problem, I’ve partnered with a group of highly talented tax writers to create Parker Tax Publishing ... a company dedicated to the idea that comprehensive, authoritative tax information service can be both easy-to-use and highly affordable.

Our product, the Parker Tax Pro Library, is breathtaking in its scope. Check out the contents listing to the left to get a sense of all the valuable material you'll have access to when you subscribe.

Or better yet, take a minute to sign yourself up for a free trial, so you can experience first-hand just how easy it is to get results with the Pro Library!

Sincerely,

James Levey

Parker Tax Pro Library - An Affordable Professional Tax Research Solution. www.parkertaxpublishing.com