[Code of Federal Regulations]
[Title 26, Volume 18]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR301.6224(c)-1]

[Page 174-175]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 301_PROCEDURE AND ADMINISTRATION--Table of Contents
 
                               Assessment
 
Sec. 301.6224(c)-1  Tax matters partner may bind nonnotice partners.

    (a) In general. In the absence of a showing of fraud, malfeasance, 
or misrepresentation of fact, if the tax matters partner enters into a 
settlement agreement with the Internal Revenue Service with respect to 
partnership items, including partnership-level determinations relating 
to any penalty, addition to tax, or additional amounts that relate to 
adjustments to partnership items, and expressly states that the 
agreement shall be binding on the other partners, then that agreement 
shall be binding on all partners except those who--
    (1) Are, as of the day on which the agreement is entered into, 
either notice partners or members of a notice group (see Sec. 
301.6223(b)-1(c)(4) for the date on which a partner becomes a member of 
a notice group); or
    (2) Have, at least 30 days before the day on which the agreement is 
entered into, filed with the Internal Revenue Service the statement 
described in paragraph (c) of this section.
    (b) Indirect partners--(1) In general. If, under paragraph (a) of 
this section, a pass-thru partner is not bound by an agreement entered 
into by the tax matters partner, all indirect partners holding an 
interest in the partnership through that pass-thru partner shall not be 
bound by that agreement. If, however, the pass-thru partner is bound by 
an agreement entered into by the tax matters partner, paragraph (a) of 
this section shall be applied separately to each indirect partner 
holding an interest in the partnership through the pass-thru partner to 
determine whether the indirect partner is also bound by the agreement.
    (2) Example. The following example illustrates the principles of 
this section:

    Example. Partnership P has over 100 partners. Partnership J is a 
partner in partnership P with a profits interest of less than 1 percent. 
Partnership J has three partners, A, B, and C. A is a member of a notice 
group with respect to partnership P, but B and C are not. On July 1, 
2002, B filed the statement described in paragraph (c) of this section 
not to be bound by any settlement agreement entered into by the tax 
matters partner of partnership P. On August 1, 2002, the tax matters 
partner of partnership P enters into a settlement agreement with the 
Internal Revenue Service and states that the agreement is binding on 
other partners as provided in section 6224(c)(3). Because partnership J 
is bound by the settlement agreement, paragraph (a) of this section is 
applied separately to each of the indirect partners to determine whether 
they are bound. A is not bound by the agreement because A was a member 
of a notice group on the day the agreement was entered into and B is not 
bound because B filed the statement not to be bound at least 30 days 
before the agreement was entered into. C is bound by the settlement 
agreement.

    (c) Statement not to be bound--(1) Contents of statement. The 
statement referred to in paragraph (a)(2) of this section shall--
    (i) Be clearly identified as a statement to deny settlement 
authority to the tax matters partner under section 6224(c)(3)(B);
    (ii) Identify the partner and partnership by name, address, and 
taxpayer identification number;
    (iii) Specify the taxable year or years to which the statement 
applies; and
    (iv) Be signed by the partner filing the statement.
    (2) Place where statement is to be filed. The statement described in 
paragraph (c)(1) of this section generally shall be filed with the 
Internal Revenue Service service center where the partnership return is 
filed. However, if the partner knows that the notice described in 
section 6223(a)(1) (beginning of an administrative proceeding) has 
already been mailed to the tax matters partner, the statement shall be 
filed with the Internal Revenue Service office that mailed that notice.
    (3) Consolidated statements. The statement described in paragraph 
(c)(1) of this section may be filed with respect to more than one 
partner if the requirements of that paragraph (c)(1) (including 
signatures) are satisfied with respect to each partner.
    (d) Effective date. This section is applicable to partnership 
taxable years beginning on or after October 4, 2001. For years beginning 
prior to October 4,

[[Page 175]]

2001, see Sec. 301.6224(c)-1T contained in 26 CFR part 1, revised April 
1, 2001.

[T.D. 8965, 66 FR 50551, Oct. 4, 2001]