The U.S. Tax Court recently ruled on a significant case involving Kings Road Property, LLC, which could impact how partnerships handle their tax filings. The court addressed whether the deadline for filing a petition after receiving a Notice of Final Partnership Adjustment (FPA) is jurisdictional and whether equitable tolling applies. This ruling affects partnerships across the country, as it clarifies the rules surrounding tax filing deadlines.
The case, Kings Road Property, LLC v. Commissioner of Internal Revenue, was filed under docket number 10272-25 on September 21, 2026. The dispute arose after the Internal Revenue Service (IRS) issued a Notice of Proposed Partnership Adjustment (NOPPA) to Kings Road, proposing to disallow a significant charitable contribution deduction. After the IRS issued the FPA, Kings Road's counsel filed a petition, but the IRS claimed it was untimely, leading to this legal battle.
Background
Kings Road Property, LLC, is a limited liability company based in Georgia that is treated as a partnership for federal tax purposes. The company claimed a charitable contribution deduction of over $30 million related to a conservation easement on its 2020 tax return. The IRS examined this return and, on May 24, 2024, mailed a NOPPA to Kings Road, proposing to disallow the deduction and suggesting an imputed underpayment of over $11 million.
After receiving the NOPPA, Kings Road retained new legal counsel. The new attorney filed the necessary forms to represent Kings Road and began monitoring the timeline for the IRS to issue an FPA. According to tax law, the IRS has 330 days to issue an FPA after a NOPPA is sent, which Kings Road's counsel calculated to be due by April 21, 2025. However, Kings Road did not receive the FPA, and after following up with the IRS, was told that no FPA had been mailed. Consequently, Kings Road filed a protective petition on July 9, 2025, believing the FPA had not been issued.
The Ruling
The Tax Court, presided over by Judge Buch, ruled on the motions presented by both parties. The court determined that the deadline to file a petition under I.R.C. § 6234(a) is not jurisdictional, meaning it can be subject to equitable tolling. The court stated, “the deadline to file a petition under I.R.C. § 6234(a) may be subject to equitable tolling.” This ruling is significant because it allows for flexibility in filing deadlines under certain circumstances.
Furthermore, the court found that Kings Road had met the burden of proof for equitable tolling. The court explained that to qualify for equitable tolling, a party must show that it pursued its rights diligently and that extraordinary circumstances outside its control prevented timely filing. The court noted, “Kings Road’s counsel diligently pursued its rights” and that the misinformation from the IRS regarding the mailing of the FPA constituted extraordinary circumstances.
Impact
This ruling has implications for partnerships across the nation. By establishing that the deadline for filing a petition is not strictly jurisdictional, the court opens the door for more partnerships to potentially contest IRS adjustments even if they miss the initial deadline. This could lead to a more equitable treatment of partnerships that face challenges in receiving timely notifications from the IRS.
The ruling also reinforces the concept of equitable tolling in tax cases, which could influence future cases where taxpayers argue they were misinformed or faced other obstacles in meeting deadlines. The court's decision may encourage partnerships to be more proactive in their communications with the IRS and to keep thorough records of their correspondence.
What's Next
The case can be appealed to the Eleventh Circuit Court of Appeals, which may further clarify the application of equitable tolling in tax matters. Additionally, the ruling may prompt other partnerships to examine their own situations regarding the issuance of FPAs and the deadlines for filing petitions.