“Court Got It Right on Partner Penalty Defense: Tax Attorneys”
A federal appeals court got it right when it ruled that a managing partner could challenge a tax penalty in a partner-level proceeding, tax controversy attorneys told Bloomberg BNA.
Mary A. McNulty, a partner at Thompson & Knight LLP in Dallas, also said in a Sept. 7 e-mail that it is taxpayers who have similarly dealt with inefficiencies of TEFRA for years when suing for a refund as McNeill did.
“Many penalty issues may be raised only at the partner level, following assessment, payment, and the filing of a claim for refund. This procedure can be costly and time-consuming to a partner. Therefore, a taxpayer with limited funds may choose not to contest the partnership-level adjustment and spend its resources defending only the penalty,” McNulty said.