Subpart A - Adjustments by Secretary

26 USC 6245 - Secretarial authority

(a) General rule 
The Secretary is authorized and directed to make adjustments at the partnership level in any partnership item to the extent necessary to have such item be treated in the manner required.
(b) Notice of partnership adjustment 

(1) In general 
If the Secretary determines that a partnership adjustment is required, the Secretary is authorized to send notice of such adjustment to the partnership by certified mail or registered mail. Such notice shall be sufficient if mailed to the partnership at its last known address even if the partnership has terminated its existence.
(2) Further notices restricted 
If the Secretary mails a notice of a partnership adjustment to any partnership for any partnership taxable year and the partnership files a petition under section 6247 with respect to such notice, in the absence of a showing of fraud, malfeasance, or misrepresentation of a material fact, the Secretary shall not mail another such notice to such partnership with respect to such taxable year.
(3) Authority to rescind notice with partnership consent 
The Secretary may, with the consent of the partnership, rescind any notice of a partnership adjustment mailed to such partnership. Any notice so rescinded shall not be treated as a notice of a partnership adjustment, for purposes of this section, section 6246, and section 6247, and the taxpayer shall have no right to bring a proceeding under section 6247 with respect to such notice. Nothing in this subsection shall affect any suspension of the running of any period of limitations during any period during which the rescinded notice was outstanding.

26 USC 6246 - Restrictions on partnership adjustments

(a) General rule 
Except as otherwise provided in this chapter, no adjustment to any partnership item may be made (and no levy or proceeding in any court for the collection of any amount resulting from such adjustment may be made, begun or prosecuted) before
(1) the close of the 90th day after the day on which a notice of a partnership adjustment was mailed to the partnership, and
(2) if a petition is filed under section 6247 with respect to such notice, the decision of the court has become final.
(b) Premature action may be enjoined 
Notwithstanding section 7421 (a), any action which violates subsection (a) may be enjoined in the proper court, including the Tax Court. The Tax Court shall have no jurisdiction to enjoin any action under this subsection unless a timely petition has been filed under section 6247 and then only in respect of the adjustments that are the subject of such petition.
(c) Exceptions to restrictions on adjustments 

(1) Adjustments arising out of math or clerical errors 

(A) In general 
If the partnership is notified that, on account of a mathematical or clerical error appearing on the partnership return, an adjustment to a partnership item is required, rules similar to the rules of paragraphs (1) and (2) of section 6213 (b) shall apply to such adjustment.
(B) Special rule 
If an electing large partnership is a partner in another electing large partnership, any adjustment on account of such partnerships failure to comply with the requirements of section 6241 (a) with respect to its interest in such other partnership shall be treated as an adjustment referred to in subparagraph (A), except that paragraph (2) of section 6213 (b) shall not apply to such adjustment.
(2) Partnership may waive restrictions 
The partnership shall at any time (whether or not a notice of partnership adjustment has been issued) have the right, by a signed notice in writing filed with the Secretary, to waive the restrictions provided in subsection (a) on the making of any partnership adjustment.
(d) Limit where no proceeding begun 
If no proceeding under section 6247 is begun with respect to any notice of a partnership adjustment during the 90-day period described in subsection (a), the amount for which the partnership is liable under section 6242 (and any increase in any partners liability for tax under chapter 1 by reason of any adjustment under section 6242 (a)) shall not exceed the amount determined in accordance with such notice.

26 USC 6247 - Judicial review of partnership adjustment

(a) General rule 
Within 90 days after the date on which a notice of a partnership adjustment is mailed to the partnership with respect to any partnership taxable year, the partnership may file a petition for a readjustment of the partnership items for such taxable year with
(1) the Tax Court,
(2) the district court of the United States for the district in which the partnerships principal place of business is located, or
(3) the Claims Court.
(b) Jurisdictional requirement for bringing action in district court or Claims Court 

(1) In general 
A readjustment petition under this section may be filed in a district court of the United States or the Claims Court only if the partnership filing the petition deposits with the Secretary, on or before the date the petition is filed, the amount for which the partnership would be liable under section 6242 (b) (as of the date of the filing of the petition) if the partnership items were adjusted as provided by the notice of partnership adjustment. The court may by order provide that the jurisdictional requirements of this paragraph are satisfied where there has been a good faith attempt to satisfy such requirement and any shortfall of the amount required to be deposited is timely corrected.
(2) Interest payable 
Any amount deposited under paragraph (1), while deposited, shall not be treated as a payment of tax for purposes of this title (other than chapter 67).
(c) Scope of judicial review 
A court with which a petition is filed in accordance with this section shall have jurisdiction to determine all partnership items of the partnership for the partnership taxable year to which the notice of partnership adjustment relates and the proper allocation of such items among the partners (and the applicability of any penalty, addition to tax, or additional amount for which the partnership may be liable under section 6242 (b)).
(d) Determination of court reviewable 
Any determination by a court under this section shall have the force and effect of a decision of the Tax Court or a final judgment or decree of the district court or the Claims Court, as the case may be, and shall be reviewable as such. The date of any such determination shall be treated as being the date of the courts order entering the decision.
(e) Effect of decision dismissing action 
If an action brought under this section is dismissed other than by reason of a rescission under section 6245 (b)(3), the decision of the court dismissing the action shall be considered as its decision that the notice of partnership adjustment is correct, and an appropriate order shall be entered in the records of the court.

26 USC 6248 - Period of limitations for making adjustments

(a) General rule 
Except as otherwise provided in this section, no adjustment under this subpart to any partnership item for any partnership taxable year may be made after the date which is 3 years after the later of
(1) the date on which the partnership return for such taxable year was filed, or
(2) the last day for filing such return for such year (determined without regard to extensions).
(b) Extension by agreement 
The period described in subsection (a) (including an extension period under this subsection) may be extended by an agreement entered into by the Secretary and the partnership before the expiration of such period.
(c) Special rule in case of fraud, etc. 

(1) False return 
In the case of a false or fraudulent partnership return with intent to evade tax, the adjustment may be made at any time.
(2) Substantial omission of income 
If any partnership omits from gross income an amount properly includible therein which is in excess of 25 percent of the amount of gross income stated in its return, subsection (a) shall be applied by substituting 6 years for 3 years.
(3) No return 
In the case of a failure by a partnership to file a return for any taxable year, the adjustment may be made at any time.
(4) Return filed by Secretary 
For purposes of this section, a return executed by the Secretary under subsection (b) of section 6020 on behalf of the partnership shall not be treated as a return of the partnership.
(d) Suspension when Secretary mails notice of adjustment 
If notice of a partnership adjustment with respect to any taxable year is mailed to the partnership, the running of the period specified in subsection (a) (as modified by the other provisions of this section) shall be suspended
(1) for the period during which an action may be brought under section 6247 (and, if a petition is filed under section 6247 with respect to such notice, until the decision of the court becomes final), and
(2) for 1 year thereafter.