Walled Off: Does North Wall Holdings Impact BBA? Part 2
by Jenni Black
Jenni Black is a managing director in Citrin Cooperman’s national tax office and the practice leader of the tax procedure and controversy practice. Jenni is also a contributing author for Procedurally Taxing.
In this post, Black argues that the Tax Court’s reasoning in North Wall Holdings as to why the filing deadline under the Tax Equity and Fiscal Responsibility Act of 1982 is jurisdictional and not subject to equitable tolling isn’t likely to apply to the filing deadline under the Bipartisan Budget Act of 2015 because of the differences between the two regimes.
This post reflects the author’s personal views and not necessarily those of Citrin Cooperman.
On October 21, 2025, the Tax Court issued a full T.C. opinion in North Wall Holdings LLC, 165 T.C. No. 9 (North Wall). The North Wall case involved a late petition filed under the partnership audit procedures enacted by the Tax Equity and Fiscal Responsibility Act of 1982. In its opinion, the Tax Court held that the petition period under TEFRA (section 6226) is jurisdictional and, even if it wasn’t jurisdictional, equitable tolling is not available for petitions filed under section 6226. This two-part article examines the court’s analysis in North Wall to see if it sheds any light on whether section 6234(a) (as enacted by the Bipartisan Budget Act of 2015) is jurisdictional and/or subject to equitable tolling. Part 1 of this article discussed the history of TEFRA and some of the major structural
differences between BBA and TEFRA. Part 2 of this article discusses the structure of TEFRA and how it compares with BBA as well as the practicalities that exist under TEFRA that are not necessarily present in BBA. Let’s add another brick to this wall.
Structure of TEFRA and Exceptions
In determining that section 6226 is jurisdictional and not subject to equitable tolling, the Tax Court held that the overall structure of TEFRA suggested it had to be jurisdictional. When looking at the overall structure of TEFRA to aid in is determination of whether section 6226 is jurisdictional and subject to equitable tolling, the court focused on two features — the complexity of the filing provisions and the availability of relief built into TEFRA by Congress.
In North Wall, the Tax Court held that the detailed, highly technical limitations on the filing of a petition under TEFRA could not be, “linguistically speaking,” easily read to contain implicit exceptions. As mentioned in Part 1, TEFRA has a bifurcated petition period. Before anyone can file a petition under TEFRA, the IRS must have issued a valid notice of final partnership administrative adjustments (FPAA). That’s nothing new; all ways into the Tax Court require some kind of “ticket” (statutory notice of deficiency, FPAA, notice of final partnership adjustment (FPA), notice of determination following a collection due process hearing, etc.) because the Tax Court is a court of limited jurisdiction. After the issuance of the FPAA, who you are dictates when (and if) you can file a petition. The court notes that, after the 90 days, it lacks jurisdiction over a petition filed by the tax matters partner (TMP) unless the TMP is also a notice partner (and they file in the remaining 60 days). North Wall, 165 T.C. No. 9, at 13. This is
technically correct, but I’ve never seen a TMP that was not also a notice partner.1
After the 90 days relegated for the TMP to file a petition, notice partners can file a petition in the next 60 days. If a notice partner accidentally filed within the first 90 days, that petition gets kicked to the end of the 60 days. But notice partners cannot file a petition if the TMP has already done so. The Tax Court viewed these timing requirements as evidence that section 6226 is jurisdictional — the fact that a notice partner’s ability to file a petition is contingent on whether the TMP files a petition (that is, if the TMP files a petition, any petition filed by a notice partner will be dismissed) and that a window can close on one category of petitioner (the TMP) and then open for a second category (notice partners). The Tax Court held that this complexity (combined with all the other factors) demonstrates that section 6226 is jurisdictional and not subject to equitable tolling. This makes sense to me, but more in the context of the havoc that could occur if section 6226 was subject to equitable tolling. As discussed more in the next section, if these deadlines were subject to equitable tolling, a valid claim of equitable tolling could divest the court of jurisdiction in an existing case (including a concluded case). For example, if the TMP successfully argued that it should receive the benefit of equitable tolling, would this cut off the ability of a notice partner to file a petition under section 6226(b)? What if they already did?
The other aspect of TEFRA the court found provided sufficient evidence that Congress intended section 6226 to be jurisdictional and not subject to equitable tolling is the availability of a myriad of exceptions and relief afforded by Congress for situations that could impact the ability of a partner to meet the deadlines in section 6226. The Tax Court referred to several provisions specifically (but these are not all the exceptions
and relief provided in TEFRA — TEFRA is nothing but a series of exceptions and special rules): premature petitions, the IRS failing to provide proper notice, and bankruptcy. These are all situations where, if they occur, the normal TEFRA rules will not apply. I’ve already discussed the relief for premature petitions in section 6226(b)(5).
As mentioned, the IRS is required to provide notice (the notice of beginning of administrative proceeding and the FPAA) directly to the notice partners. There are several rules dealing with to whom, when, and how the IRS must provide this notice. First, section 6223(a) and (b) provide rules on who the IRS must send notice to. Second, section 6223(c) governs where the IRS must send the notice. Finally, section 6223(d) says when the IRS must mail the notices. Under section 6223(e), if the IRS fails to provide notice to a partner within the time prescribed, that partner is entitled to relief, if they want it. If the TEFRA proceeding is ongoing at the time the partner receives notice, the partner is a party to that proceeding, unless they elect not to be. If the TEFRA proceeding has concluded, the partner may elect to have the results of the proceeding apply to the partner but, if no election is made, they won’t be. Under section 6223(e), if the partner elects not to be part of, or apply the results of, the TEFRA proceeding, the partner “converts out” of TEFRA — that is, TEFRA no longer applies concerning that partner and the IRS must follow deficiency procedures to make adjustments to the partner.
1 A TMP has to be a general partner (member-manager for LLCs) in the partnership. Reg. section 301.6231(a)(7)-1(a) (this regulation is needlessly complicated). As mentioned, almost all direct partners are notice partners. There are only three situations where the TMP can be a non-notice partner: 1) the TMP is a current general partner and was not a partner in the year under audit; 2) the partnership has more than 100 direct partners and the TMP owns less than a 1 percent interest; and 3) all direct partners are disqualified from being TMP and the IRS selects an indirect partner. I’ve never seen any of these things happen, but it’s technically possible.
The final exception mentioned by the Tax Court is one of the special enforcement provisions under section 6231(c). Specifically, bankruptcy. Under reg. section 301.6231(c)-7, if a partner files for bankruptcy, the partner converts out of TEFRA (that is, TEFRA no longer applies concerning that partner). If a partner is not subject to TEFRA then obviously the partner is not bound to the TEFRA proceeding or the filing deadlines under section 6226. Bankruptcy or receivership are not the only special enforcement provisions that can kick a partner out of TEFRA, but they’re the only ones the partner has control over. All the other ones (indirect method of proof, criminal investigation, jeopardy or termination assessments, etc.) require an action of the IRS to trigger it.
Following the Supreme Court’s analysis in United States v. Brockamp, 519 U.S. 347 (1997) (determining that the filing deadlines in section 6511 are not subject to equitable tolling), the Tax Court found it significant that TEFRA contained many explicit exceptions to the filing deadlines (all involving situations where a partner converts out of TEFRA), which suggests that Congress did not intend for equitable remedies to apply. North Wall, 165 T.C No. 9, at 22. The court noted that, if the deadline was not jurisdictional and was subject to equitable tolling, these exceptions would not be needed. In other words, if Congress already created a bunch of exceptions to provide relief, it arguably didn’t intend for courts to be able to add additional ones.
So, would any of this analysis be the same for BBA? Probably not. Section 6234 (BBA) governs the filing of a petition in response to an FPA under BBA. Under section 6234, the partnership (acting through the partnership representative) can file a petition within 90 days of when the FPA is mailed. Just like in TEFRA, a petition can be filed in the Tax Court or the district court or Court of Federal Claims if a jurisdictional deposit is made. However, unlike TEFRA, partners cannot file a petition in response to an FPA under BBA. And, unlike TEFRA, the partners are not parties to a BBA proceeding. So while TEFRA has a pool of possible petitioners and many parties to the proceeding, BBA has one possible petitioner and one possible party. In other words, when it comes to filing a petition, BBA is much more similar to deficiency procedures than it is to TEFRA.
Disasters and Practicalities
“Human sacrifice, dogs and cats living together . . . mass hysteria!”2 TEFRA is a series of carefully timed steps. If those steps are interrupted, the whole system can fall. The Tax Court recognized this reality, and this is probably the most compelling reason why the filing deadline under TEFRA cannot be equitably tolled. So what are these compelling reasons?
As mentioned, under TEFRA, all partners are parties to one unified TEFRA proceeding. After the TEFRA proceeding is over, the IRS must apply
the results of the proceeding to the partners, either by furnishing a notice of computational adjustment (NCA) or a statutory notice of deficiency, depending on whether partner-level factual determinations are needed to apply the results of the proceeding to the partner. The IRS has approximately one year3 from the conclusion of the TEFRA proceeding to issue all these partner notices. As with any statutory notice of deficiency, the partner can file a petition in Tax Court. In addition, partners have the ability to challenge the computations in an NCA by paying and bringing a claim for refund within six month of the NCA. If all these steps are being taken, what happens if one partner files a late petition, arguing it is entitled to equitable tolling? As the Tax Court noted in North Wall: chaos. Because all partners are parties to a TEFRA proceeding, a single partner’s successful claim of equitable tolling would suck all the other partners back in, even if they had already paid or had a final partner-level court proceeding. And all of these other partners may not have a claim for equitable tolling. So not only would allowing equitable tolling of the TEFRA filing deadline allow partners without a valid claim for equitable tolling benefit from one partner’s situation, but it would also disrupt the steps taken after the TEFRA proceeding was final, including upending final court decisions and requiring assessments to be abated. This isn’t the complete list of problems that would arise if the TEFRA filing deadline under section 6226 was subject to equitable tolling, but you get the idea.
Would these same problems exist in BBA? Again, probably not. The BBA proceeding determines the partnership’s liability and there is not a secondary partner-level proceeding. As BBA has a single petitioner, a single party to the proceeding, and determines a single person’s liability under the code, the same chaos would not occur as it would under TEFRA if the filing deadline was subject to equitable tolling. BBA is much more similar to deficiency procedures in
2 Ghostbusters (1984).
3 The minimum period to which no partner’s period of limitations for assessing tax attributable to adjustments to partnership items is suspended for one year after the TEFRA decision (or defaulted FPAA) becomes final. Section 6229(d). As it is a suspension (which starts when the FPAA is mailed to the TMP), if there was remaining time on the period of limitations when the FPAA was mailed it is tacked onto the end of the suspension. But if you’re computing tacking, something has gone horribly wrong.
this regard, and several circuits have already held the filing deadline in section 6213 is not jurisdictional and subject to equitable tolling. To be sure, the Tax Court, despite those circuit court opinions, still treats the deficiency deadline as jurisdictional. See Carlton Smith, “Sixth Circuit: Deficiency Petition Deadline Is Nonjurisdictional,” Tax Notes Federal, Sept. 8, 2025, p. 1643.
But what about push out? If the partnership has elected to push out the adjustments, once the BBA proceeding is complete, the partnership must furnish the push out statements, and the partners must take into account the adjustments. That’s all true, but the same person (the partnership) that would be filing the petition is the same person who would be furnishing the push out statements. If equitable tolling applies, this means the petition was filed late. There’s no way a partnership who hasn’t filed a petition is going to issue push out statements and then turn around and file a petition. The same reason why a partnership would have the filing deadline equitably tolled would be the same reason why the partnership wouldn’t have known to issue push out statements.
Although the statutory language is the same, BBA does not have the level of complexity that
TEFRA has. Although courts, post-Boechler, focused primarily on the language of the petition statute, the Tax Court went above and beyond in North Wall and looked at the overall structure of TEFRA and whether equitable tolling would work within TEFRA or whether it would create a mess Congress clearly didn’t intend. So while I think the Tax Court’s analysis in North Wall is spot on for TEFRA and why its filing deadline cannot be subject to equitable tolling, it’s not going to shed any light on whether the BBA filing deadline is jurisdictional and subject to equitable tolling. The two regimes differ too much on the points the Tax Court found instructive in TEFRA. If the courts follow the line of cases holding section 6213 is not jurisdictional and subject to equitable tolling for the filing deadline under BBA, this could create a situation where materially similar statutory language4 is interpreted differently based on context.
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