Judgment summary
Kings Road Property, LLC, a partnership subject to the BBA partnership audit procedures, received a Notice of Proposed Partnership Adjustment (NOPPA) on May 24, 2024. Its counsel calculated that a Final Partnership Adjustment (FPA) would need to be mailed by April 21, 2025, and that a petition would be due by July 20, 2025.
The Commissioner had, in fact, mailed the FPA on March 25, 2025, well before the calculated deadline. When Kings Road's counsel contacted the IRS on May 21, 2025, she was incorrectly told that no FPA had been sent. Kings Road filed a protective Petition on July 9, 2025, unaware the FPA had already issued.
The Commissioner moved to dismiss for lack of jurisdiction, arguing the Petition was untimely under section 6234(a), filed 106 days after mailing instead of within 90 days. Kings Road argued the deadline was non-jurisdictional and subject to equitable tolling, and cross-moved to dismiss on grounds the FPA itself was invalidly mailed.
The court held that the section 6234(a) deadline is not jurisdictional, following Big Apple Tompkins Realty LLC v. Commissioner, and that it is subject to equitable tolling. Applying the two-part test requiring diligent pursuit of rights and extraordinary circumstances beyond the petitioner's control, the court found Kings Road met its burden. The court also found the FPA was properly mailed and validly issued, rejecting Kings Road's arguments regarding the address abbreviation, alleged lack of diligence, equitable estoppel, and the authority of the signing official under the Federal Vacancies Reform Act. Both the Commissioner's Motion to Dismiss and Kings Road's Cross-Motion to Dismiss were denied.
Background
Kings Road Property, LLC is a Georgia LLC treated as a partnership for federal tax purposes, with Kings Road Manager, LLC as its partnership representative, both sharing the same Savannah address. On October 14, 2021, the IRS received Kings Road's 2020 Form 1065 claiming a charitable contribution deduction for a conservation easement valued at $30,570,000.
The Commissioner examined the return and on May 24, 2024, mailed a NOPPA proposing to disallow the deduction, an imputed underpayment of $11,310,900, and an accuracy-related penalty of $4,395,748. Kings Road did not request modification.
After receiving the NOPPA, Kings Road retained new counsel, whose Form 2848 was entered into the CAF system on August 27, 2024. Counsel calculated the FPA mailing deadline (330 days from the NOPPA under section 6235) as April 21, 2025, and the petition deadline (90 days under section 6234(a)) as July 20, 2025.
No FPA was received by Kings Road, its partnership representative, or new counsel. On May 21, 2025, counsel contacted the IRS and was told no FPA had been mailed and there had been no activity since the power of attorney was filed. An account transcript also did not show issuance of an FPA. Kings Road filed a protective Petition on July 9, 2025.
In fact, the Commissioner had mailed the FPA, dated March 25, 2025, to Kings Road and its partnership representative by certified mail, determining the same imputed underpayment and accuracy-related penalties under section 6662. USPS tracking showed delivery on April 2 and 3, 2025, but both FPA packages were returned as undeliverable, marked as unable to forward. The FPA was also mailed to Kings Road's former counsel, whose Form 2848 dated to October 2022, but not to the new counsel on file.
Core dispute
The Commissioner moved to dismiss for lack of jurisdiction, contending the Petition, filed 106 days after the FPA was mailed, was untimely under the 90-day deadline in I.R.C. section 6234(a).
Kings Road opposed, arguing that section 6234(a) is a non-jurisdictional claims-processing rule subject to equitable tolling given the circumstances, including the IRS's misinformation that no FPA had been sent.
Kings Road also cross-moved to dismiss, arguing the FPA itself was invalid because it was not mailed to the last known address (due to the abbreviation 'STE' rather than 'Suite'), the Commissioner failed to exercise due diligence after the mailings were returned undelivered, the Commissioner should be equitably estopped from asserting proper mailing, and the FPA was signed by an individual, Melanie Krause, who was not properly appointed under the Federal Vacancies Reform Act.
Court findings
The court held that the section 6234(a) petition deadline is not jurisdictional, following Big Apple Tompkins Realty LLC v. Commissioner, No. 19040-23, 167 T.C. (Aug. 5, 2026). It further held that this deadline is subject to equitable tolling, distinguishing the BBA regime from the TEFRA regime addressed in North Wall Holdings, LLC v. Commissioner, 165 T.C. 143 (2025), where the TEFRA petition deadlines were found jurisdictional and not subject to tolling due to their technical complexity.
Applying the two-part equitable tolling test from Menominee Indian Tribe of Wisconsin v. United States and Holland v. Florida, the court found Kings Road pursued its rights diligently, including following up with counsel and staff, obtaining an IRS transcript, and contacting the IRS to inquire about the FPA. The court also found extraordinary circumstances beyond Kings Road's control, namely the FPA packages being returned undelivered and the IRS misinforming counsel that no FPA had been sent.
On the Cross-Motion, the court found the FPA was properly mailed to the last known address, holding that the abbreviation 'STE' for 'Suite' was an inconsequential error that did not prevent delivery, distinguishing Wilson v. Commissioner and following Kohilakis v. Commissioner. The court rejected the due diligence argument, distinguishing Estate of McKaig v. Commissioner and Mulder v. Commissioner, since the Commissioner mailed the FPA to the correct address, unlike in Mulder.
The court also rejected the equitable estoppel argument, finding Kings Road suffered no prejudice regarding the petition deadline given the equitable tolling ruling, and that it failed to establish any adverse effect concerning its ability to make a push-out election under section 6226.
Finally, the court rejected the Federal Vacancies Reform Act challenge to Melanie Krause's authority to sign the FPA, finding she had authority as first assistant to the Commissioner under 5 U.S.C. section 3345(a)(1), as deputy commissioner under Delegation Order 1-23 (Rev. 1), and because, in any event, a notice need not be signed, citing Clovis I v. Commissioner and Tavano v. Commissioner.
Outcome
The court denied the Commissioner's Motion to Dismiss for Lack of Jurisdiction, equitably tolling the section 6234(a) deadline and deeming Kings Road's Petition timely filed.
The court also denied Kings Road's Cross-Motion to Dismiss for Lack of Jurisdiction, finding the FPA was validly issued and properly mailed.
An appropriate order was to be issued.
Major issues / areas of contention
- Whether the 90-day deadline to file a petition under I.R.C. section 6234(a) is jurisdictional.
- Whether the section 6234(a) deadline may be subject to equitable tolling.
- Whether Kings Road met the burden required to establish equitable tolling, namely diligent pursuit of rights and extraordinary circumstances beyond its control.
- Whether the FPA was mailed to Kings Road's last known address despite the address abbreviation 'STE' rather than 'Suite'.
- Whether the Commissioner exercised due diligence after the FPA packages were returned undelivered.
- Whether the Commissioner should be equitably estopped from asserting the FPA was properly mailed.
- Whether the FPA was invalid because it was signed by an individual allegedly not properly appointed under the Federal Vacancies Reform Act.