Extension OK where individual had apparent authority to sign it.

• Author: Beavers, James A.
• Position: 2015 Tax Court memorandum decision in Summit Vineyard Holdings v. Commissioner

A consent to extend the limitation period for the assessment for partnership items signed by the tax matters partner of a partnership in his capacity as the tax matters partner of another partnership was valid because the individual had the apparent authority to sign the consent.

Background

Summit Vineyard Holdings (Summit) is a limited liability company with a principal place of business in Seattle. In 2007, Summit SV Holdings, another LLC, was a member of Summit and was also its tax matters partner (TMP) in 2007, the year at issue. Meridian Equity LLC (Meridian) replaced Summit SV Holdings as the TMP of Summit in 2009. Eric Gjelde was the managing member of both Meridian and Summit SV Holdings. Summit's 2007 partnership return, on which Summit SV Holdings was designated Summit's TMP, was deemed filed on April 15,2008. Gjelde signed the return.

In February 2010, the IRS started an examination of Summit's 2007 return. In March 2010, Gjelde executed Form 2848, Power of Attorney and Declaration of Representation, on behalf of Summit for Summit's partnership tax years 2006, 2007, and 2008, designating Travis Burgess, a CPA, and others, as Summit's representatives. Burgess represented Summit before the IRS in connection with the examination of Summit's 2007 Form 1065, U.S. Return of Partnership Income. The examination was conducted by Revenue Agent Joseph Battaglino, whom Burgess dealt with throughout the process.

In August 2010, Battaglino prepared a Form 872-P, Consent to Extend the Time to Assess Tax Attributable to Partnership Items, for Summit's 2007 tax year and provided it to Burgess. However, Battaglino did not fill out page 2 of Form 872-P to specify the name of the TMP that should sign the form. Burgess sent the form to Gjelde, Gjelde's secretary filled in Meridians name on page 2 of Form 872-P, and Gjelde signed the form and sent it back to Burgess. Burgess sent Battaglino an email on Dec. 16,2010, with an electronically scanned copy of the signed Form 872-P for Summit's tax year 2007 attached and sent the original to Battaglino in the mail, which he received on Dec. 20,2010.

Battaglino and his group manager at the IRS believed that it was a valid Form 872-P because Meridian was Summit's TMP at the time the Form 872-P was signed in 2010. Furthermore, both were fully aware that Summit's TMP had changed between 2007, the year at issue, and 2010.

Eventually, the IRS issued Summit a notice of final partnership administrative adjustment...