Meserve Drilling Partners v. Commissioner

Two partnerships appeal the Tax. Court’s denial of their motion to dismiss for lack of subject matter jurisdiction. We affirm.

On March 18,1986 and March 28,1996, the Commissioner of Internal Revenue mailed to Meserve Drilling Partners and Columbia Energy Fund notices of a “Final Partnership Administrative Adjustment” (FPAA), determining adjustments to “Partnership Items” in their income tax returns. 1 The Partnerships filed timely petitions for readjustment along with motions to dismiss for lack of jurisdiction because the regulation defining the term “Partnership Item” had not been adopted when the FPAAs were mailed, and thus no Partnership Items existed. The Partnerships argued the subsequently enacted regulation could not retroactively confer jurisdiction on the Tax Court. The Tax Court denied the motions, explaining it had jurisdiction when the Commissioner mailed a valid FPAA and the eligible partner filed a timely petition with the Tax Court seeking readjustment of the Partnership Items.

The Tax Treatment of Partnership Items Act of 1982, Pub.L. No. 97-248, Title IV, 96 Stat. 648 (codified at 26 U.S.C. §§ 6221-6233 ) was adopted to deal with administrative problems…