AD GLOBAL FUND, LLC, by and through NORTH HILLS HOLDING, INC., a Partner Other Than the Tax Matters Partner, Plaintiff, v. The UNITED STATES, Defendant, 67 Fed. Cl. 657

OPINION CHRISTINE O. C. MILLER, Judge. This case is before the court on plaintiffs motion for

summary judgment. Plaintiff asserts that the Internal Revenue Service failed to issue a Final Partnership Administrative Adjustment for plaintiffs 1999 tax return within the statutorily required time period prescribed by 26 U.S.C. (the “I.R.C.”) § 6229(a) (2000), thereby rendering plaintiffs partnership items “final” and barring the IRS from further action against plaintiff. Argument has been held, and the parties and amicus curiae filed supplemental briefs. The issue to be resolved calls for

interpretation of a provision of the Internal Revenue Code, a tax statute. Congress enacted tax reform legislation governing partnerships at a time when the fisc took note of the impact of tax shelters. The legislation intended uniformity and specificity. The parties array a smorgasbord of legislative history with varying pedigrees under the law to support their respective

interpretations of legislation that is ambiguous. Rarely does resort to legislative history fail to arm a litigant to argue any sentient

interpretation, and this case is no exception. Crediting Congress with appreciation for the English language and syntax, save in the exceptional instance, serves as the foundation for judicial

interpretation of legislative acts. The current state of the law, regrettably, welcomes use of legislative history as a reference library, with the bracing uncertainty, lack of predictability, and subjectivity that a loosely regulated data base implies. This opinion applies a conservative use of legislative history with the following modest objectives: to construe language that, only after every effort has been made to honor its plain meaning, has been deemed ambiguous and next to identify the strongest and most explicit and consistent expression of legislative intent that yields a rehable

interpretation, and failing that and only then, to call on a presumption that aids in resolving issues of construction. FACTS The following facts are undisputed. AD Global Fund, LLC (“plaintiff’), is a limited liability company established under the laws of the State of Delaware in 1999. For federal tax purposes, plaintiff is a partnership subject to the Unified Partnership Procedures of the Tax Equity and Fiscal Responsibility Act of 1982 (“TEFRA”), 26 U.S.C. §§ 6221-6284 (2000).

The Diversified Group Incorporated (“Diversified”) serves as the tax matters partner (the “TMP”) of plaintiff, and North Hills Holding, Inc. (“North Hills”), is a member and notice partner of plaintiff. On or about April 15, 2000, plaintiff filed its United States Partnership Return for the taxable year 1999, and the return was deemed filed on Monday, April 17, 2000. On or about May 27, 2003, the Internal Revenue Service (the “IRS”) issued a Notice of Beginning of [Partnership] Administrative Proceeding (the “NBAP”) to plaintiff.

On or about October 9, 2003, the IRS mailed plaintiffs TMP the Notice of Final Partnership Administrative Adjustment (the “FPAA”) for the 1999 partnership year. As explained more fully in this opinion, this process initiates the IRS’s treatment of partnership items. The IRS audits a partnership at the level of the legal entity, not at the partner level. The NBAP is sent to the individual parties, I.R.C. § 6223(a)(1), (d)(1). If the IRS challenges the reporting of any item, it issues the FPAA as a predicate to making individual partner assessments. I.R.C. §§ 6223(a)(2), (d)(2), 6225(a).

The TMP then may contest the adjustments in the FPAA in court. I.R.C. § 6226(a). However, a notice partner may initiate suit if the TMP does not do so. I.R.C. § 6226(b)(1). All parties are treated as partners in the event either type of proceeding is commenced. I.R.C. § 6226(c), (d)(1)(B), and the court can determine all partnership items for the affected year. I.R.C. § 6226(f). Plaintiff filed a Complaint for Readjustment of Partnership Items Under Internal Revenue Code § 6226 on March 8, 2004. Subsequently, plaintiff moved for

summary judgment, asserting that the IRS did not issue an FPAA within the three-year period set forth in I.R.C. § 6229(a). The issue posed by plaintiffs motion concerns the period of time within which the IRS must assess tax attributable to partnership items. Essential to its disposition is the interplay between two provisions of the I.R.C.: Whereas plaintiff contends that the time period in I.R.C. § 6229(

a) is a separate period of limitations exclusive of the regular period of limitations set forth in I.R.C. § 6501(a), defendant argues that I.R.C. § 6229(

a) does not supersede I.R.C. § 6501(

a) and serves, instead, as a minimum period for assessments attributable to partnership items that may, on occasion, extend the period of limitations of I.R.C. § 6501(a). Therefore, the issue to be resolved is whether

section 6229(

a) is independent of

section 6501(a), or whether

section 6229(

a) merely serves as an extension of

section 6501(a). DISCUSSION Within the context of plaintiffs

summary judgment motion, the parties frame the issues slightly differently. Plaintiff asserts that the IRS failed to assess taxes attributable to partnership items within the partnership-specific three-year period required by I.R.C. § 6229(a), which is the only time period within which the IRS may assess tax on partnership items. Defendant rejoins that the IRS may assess tax attributable to partnership items within the period set by I.R.C. § 6501(

a) after the period of I.R.C. § 6229(

a) has expired. As a complement to its contention, defendant asserts that the issuance of an FPAA, which suspends the “minimum limitations period,” see, e.g., Def.’s Br. filed Jan. 31, 2005, at 5, specified in I.R.C. § 6229(a), perforce suspends the running of the limitations period in I.R.C. § 6501(a). 1. Standard of review RCFC 56(

e) provides that

summary judgment “shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” RCFC 56(c); see Am. Pelagic Fishing Co. v. United States, 379 F.3d 1363, 1370-71 (Fed.Cir.2004). In the instant case, the facts relevant to the

summary judgement motion are undisputed. The court is left with a pure issue of law upon which

summary judgment appropriately may be rendered. II. TEFRA 1. Background of TEFRA The Tax Equity and Fiscal Responsibility Act of 1982 was enacted to “improve the auditing and adjustments of income tax items attributable to partnerships.” Alexander v. United States, 44 F.3d 328, 330 (5th Cir.1995); see also Roberts v. Comm’r, 94 T.C. 853, 859, 1990 WL 77203 (1990) (“Congress enacted TEFRA to provide a method of uniformly adjusting items of partnership income, loss, deduction, or credit that affect each partner.”).

Prior to its passage, tax liability adjustments of individual partners based on the operations of the partnership were rendered at the partner level, often creating inconsistent and duplicative results between partners in the auditing process. Callaway v. Comm’r, 231 F.3d 106, 107 (2d Cir.2000). If, for example, the IRS deemed it necessary to extend the statute of limitations concerning the partners’ liability for the operation of the partnership, each partner, as opposed to the singular voice of the partnership, was required to consent to the extension. Id. at 108.

In a like manner, settlement agreements and judicial determinations affecting one partner were not binding on the other partners. Id. With the enactment of TEFRA, however, came a “single unified procedure for determining the tax treatment of all partnership items at the partnership level, rather than separately at the partner level.” Id. This treatment allows for one proceeding to determine all partnership items, and the result of this proceeding then applies to each individual partner’s returns without further deficiency proceedings. Roberts, 94 T.C. at 859-60.

As a basic precept of partnership law, partnerships themselves do not pay federal income taxes. Instead, TEFRA requires a partnership to file an annual information return that reports its partners’ distributive shares of income, gains, deductions, and credits. Partners are individually responsible for reporting their pro rata share of tax on then* own income tax returns. Weiner v. United States, 389 F.3d 152, 154 (5th Cir.2004), cert. denied, — U.S. -, 125 S.Ct. 2312, 161 L.Ed.2d 1091 (2005). As such, treatment of partnership items is determined at the partnership level.

See I.R.C. § 6221 (“Except as otherwise provided in this sub-chapter, the tax treatment of any partnership item ... shall be determined at the partnership level.”). Partnership items may be adjusted only at the partnership level and only pursuant to TEFRA’s provisions. Callaway, 231 F.3d at 109; see I.R.C. §§ 6221, 6225(a). The IRS may audit a partnership. The process is initiated when the IRS sends an NBAP to any partner entitled to notice. I.R.C. § 6223(a)(1); Callaway, 231 F.3d at 109.

If the IRS audit results in the adjustment of any partnership items on the partnership return, the IRS must send the individual partners an FPAA. I.R.C. § 6223(a)(2); Kaplan v. United States, 133 F.3d 469, 471 (7th Cir.1998). Once the FPAA has been issued, the TMP has ninety days to file a petition for a readjustment of the partnership items for the taxable year at issue with the Tax Court, the United States Court of Federal Claims, or the United States District Court in which the partnership’s principal place of business is located. I.R.C. § 6226(a).

If the TMP does not file a petition for readjustment within ninety days, other partners have sixty days within which to file a petition for a readjustment of the partnership items for the taxable year. Id. § 6226(b)(1). As long as they have an interest in the outcome of the action, all partners are treated as parties to the petition, whether it is filed by the TMP or by a notice partner. Id. § 6226(c), (d).

Once the adjustments are final, “the IRS may assess partners with the tax which properly accounts for their distributive share of the adjusted partnership items, without notice, as a computational adjustment.” Callaway, 231 F.3d at 109-10 (citing I.R.C. §§ 6225(a), 6230(a)(1), 6231(a)(6)). Additional tax liability may be assessed against individual partners for one year after the IRS completes the partnership’s tax determination. Weiner, 389 F.3d at 155 (citing I.R.C. § 6229(d)). A partner may contest his tax liability, but may not bring an action for a refund attributable to partnership items.

Id. at 110 (citing I.R.C. § 7422(h)). Once a partner enters into a settlement with the IRS regarding his tax liability, he is no longer eligible to participate in any partnership level litigation. Id. (citing I.R.C. §§ 6228(a)(4), 6224(c)(1)). Per I.R.C. § 6231(b)(1)(C), partnership items become nonpartnership items when settlement occurs with an individual partner concerning such items. 2. I.R.C. § 6229(

a) and I.R.C. § 6501 1) Language of I.R.C. § 6229(

a) and I.R.C. § 6501

Section 6229 is entitled “Period of limitations for making assessments.” I.R.C. § 6229(

a) guides the timely issuance of an FPAA, providing: Except as otherwise provided in this section, the period for assessing any tax imposed by subtitle A with respect to any person which is attributable to any partnership item (or affected item) for a partnership taxable year shall not expire before 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). This three-year period may be extended by I.R.C. § 6229(b)(1), which reads, in relevant part: (

b) Extension by agreement.—

(1) In general. — The period described in subsection (a) (including an extension period under this subsection) may be extended— (

A) with respect to any partner, by an agreement entered into by the Secretary and such partner, and (

B) with respect to all partners, by an agreement entered into by the Secretary and the tax matters partner .... The competing statute is I.R.C. § 6501(a), which provides, in pertinent part: “General rule. — Except as otherwise provided in this section, the amount of any tax imposed by this title shall be assessed within 3 years after the return was filed____” Plaintiff contends that I.R.C. § 6229(

a) is a separate statute of limitations distinct from I.R.C. § 6501, whereas defendant conceptualizes I.R.C. § 6229(

a) as a minimum period for the assessment of tax, not a statute of limitations that operates apart from I.R.C. § 6501. Plaintiff cites numerous rulings from various courts purporting to support its claim that

section 6229(

a) controls the determination of partnership items. See Weiner, 389 F.3d at 154 (“The IRS is given three years from the later of (1) the date a partnership return is due, or (2) the date the partnership return is filed, to issue an FPAA.”); Monahan v. Comm’r, 321 F.3d 1063, 1065 n. 2 (11th Cir.2003) (“Normally, the period for assessing any tax with respect to a partnership item for a specific partnership taxable year is three years from the date the partnership return is filed.”); Madison Recycling Assocs. v.

Comm’r, 295 F.3d 280, 286 (2d Cir.2002) (paraphrasing “the period for assessing income tax attributable to any partnership item ... for a partnership taxable year” as the period defined in I.R.C. § 6229(a)); Callaway, 231 F.3d at 110 (construing I.R.C. § 6229(

a) to “supersede the individual partner’s general three-year limitations period in

section 6501(a)”); CC & FW. Operations L.P. v. Comm’r, 273 F.3d 402, 405 (1st Cir.2001) (noting that “Section 6229(

a) says that the limitations period for assessing tax on a taxpayer, where the tax is attributable to a partnership item, does not expire before three years after the partnership return was filed”); Med. & Bus. Facilities, Ltd. v. United States, 60 F.3d 207, 209-10 (5th Cir.1995) (citing I.R.C. § 6229(

a) for the “statutory period for assessing any income tax attributable to partnership items for a partnership’s tax year”); Monetary II Ltd. P’ship v. Comm’r, 47 F.3d 342, 344 (9th Cir.1995) (citing I.R.C. § 6229(

a) for the limitations period for assessing income tax attributable to a partnership); Slovacek v. United States, 36 Fed.Cl. 250, 255 (1996) (“The statute of limitations for partnership assessments is set out in I.R.C. § 6229(a) ....”). In support of its position, defendant relies on the United States Tax Court’s majority opinion in Rhone-Poulenc Surfactants & Specialties, L.P. v. Comm’r, 114 T.C. 533, 542, 2000 WL 863142 (2000), which resolves the possible conflicts between I.R.C. §§ 6501 and 2209. Defendant also cites Andantech L.L.C. v.

Comm’r, 331 F.3d 972, 976 (D.C.Cir.2003), in which the United States Court of Appeals for the District of Columbia Circuit approved the reasoning of the Tax Court in Rhone-Poulenc. These are but two eases against many, but they are more recent and address the issue more directly. 2) References to I.R.C. § 6229(

a) Throughout I.R.C. § 6229, reference is made to the “period” described in

section 6229(a).

Section 6229(b)(1) allows for an extension of the “period described in subsection (a).” In explicit coordination with

section 6501, I.R.C. § 6229(b)(3) makes note of an extension of the general period of assessment under

section 6501(e)(4), and provides that such agreements extend the “period described in ... [6229](

a) only if the agreement expressly provides that such agreement applies to tax attributable to partnership items.” Further,

section 6229(

d) suspends the running of the “period specified in subsection (a)” when notice of an FPAA is mailed to the TMP. In the event of an unidentified partner,

section 6229(e)(2)(

A) provides that the Secretary mail a notice to the TMP “before the expiration of the period otherwise provided” in

section 6229(

a) as one method for extending the period of time for assessment of tax attributable to any partnership item. Another reference to the period of limitations of

section 6229(

a) appears in

section 6229(f)(1), which sets forth the protocol for treating partnership items that have become nonpartnership items “before the expiration of the period otherwise provided in this section.” This subsection also refers to “the period of limitations” for assessing tax attributable to partnership items when a partner has entered into a settlement agreement. I.R.C. § 6229(f)(2). Finally, subsection 6229(

g) provides the “period of limitations for penalties,” and

section 6229(

h) suspends “the running of the period of limitations provided in this section” if a bankruptcy petition is filed naming a partner as a debtor.

Section 6501 includes references to

section 6229. One instance is a cross-reference for “extension of period in the case of partnership items.” I.R.C. § 6501(n)(2). 3) The parties’ positions on the plain meaning of I.R.C. § 6229(

a) The phrasing of

section 6229’s time period as a “period of limitations,” combined with the language that the period for assessment “shall not expire before” three years after the later of the date the partnership return was filed or the last day for filing such return, I.R.C. § 6229(a), precipitate the question as to whether

section 6229(

a) serves as a statute of limitations for making assessments on individual partners, or functions as a special provision for assessing tax on partnership items, thereby extending the three-year period of I.R.C. § 6501(a). Plaintiff contends that the statute plainly creates a separate statute of limitations. Defendant reads the language as plainly extending the applicable statute of limitations.

Both would be color-able arguments for the plain meaning of the statute were it not for the imprecision in structuring the provision: Language denoting an extension of a period of limitations is seeded with repeated phrases that denote the creation of a separate, fully contained and integrated statute of limitations for partnership items. III. Caselaw dynamics The following cases impart guidance on the interplay of I.R.C. §§ 6229(

a) and 6501(

a) and the precedence of one or the other in dictating which provision dictates the duration of the limitations period. The parties disagree on whether this issue has been addressed directly in prior caselaw so as to dictate an outcome in the present controversy. Regardless of the manner of diseussionwhether in dicta or in more substantive discourse-none of the decisions cited by the parties, and discussed in this opinion, were issued by the United States Supreme Court or the United States Court of Appeals for the Federal Circuit.

Therefore, they constitute persuasive authority and are not binding on the United States Court of Federal Claims. The court must also consider the Federal Circuit’s guidance that, while other circuits do not create binding precedent on the Federal Circuit, “we accord great weight to the decisions of our sister circuits when the same or similar issues come before us, and we ‘do not create conflicts among the circuits without strong cause.’ ” Admiral Fin. Corp. v. United States, 378 F.3d 1336, 1340 (Fed.Cir.2004) (quoting Wash. Energy Co. v. United States, 94 F.3d 1557, 1561 (Fed.Cir.1996)).

However, in the instant controversy, “[a] conflict[] among the circuits” already exists: The D.C. Circuit has held that

section 6229(

a) operates as an extension, while other circuits have determined (in dicta or otherwise) that it is a statute of limitations. The court therefore gives serious consideration to the competing views. 1. Maxwell v. Commissioner Petitioners, Larry and Vickey Maxwell, were partners in VIMAS, LTD. (“VIMAS”), a Texas limited partnership formed to “acquire, market, and exploit video game masters.” Maxwell v. Comm’r, 87 T.C. 783, 785, 1986 WL 22033 (1986). Respondent mailed a notice of deficiency to petitioners determining deficiencies for their taxable years inclusive of 1979-1982.

The 1982 deficiency arose, “in part, from a disallowance of petitioners’ distributive share of [VIMAS’s] claimed loss and investment tax credit for the partnership’s” 1982 taxable year. Id. at 785. Petitioners’ interest in VIMAS affected the 1979 and 1980 deficiencies, as those deficiencies resulted from the disallowance of investment tax carryback claimed by petitioners in 1982 as partners in VIMAS.

Further, an addition to tax was determined for petitioners’ 1979, 1980, and 1982 tax years for the alleged overvaluation or overstated basis of VIMAS’s partnership property, and an addition to tax was determined for 1982 based on petitioners’ claimed tax benefits resulting from their interest in VIMAS. Id. On February 28, 1985, respondent initiated an administrative proceeding pursuant to I.R.C. § 6224 and mailed Mr. Maxwell, as TMP, a notice of the beginning of the administrative proceeding. Id. at 786. At the time the matter was decided, notice of an FPAA had not been issued, and Mr.

Maxwell had executed a Consent to Extend the Time to Assess Tax Attributable to Items of a Partnership on behalf of VIMAS. Id. Petitioners challenged the determination of deficiencies and additions to tax that arose out of the adjustments relating to partnership items of income, deduction, or credit for certain partnership taxable years.

Respondent asserted that particular adjustments that resulted in the I.R.S.’s determination of a portion of the 1982 deficiency were partnership items and that the Tax Court had jurisdiction over these items only if they were raised in a petition after an FPAA had been issued pursuant to I.R.C. § 6226 and other rules. Id.

Maxwell is instructive because it “presents the dichotomy between, on the one hand, the procedures applicable to the determination and redetermination of deficiencies and, on the other hand, the procedures applicable to the administrative adjustment and judicial readjustment of partnership items.” Id. at 787. Hence, the implication is that a difference exists between TEFRA determinations and matters resolved outside of TEFRA. As the Tax Court aptly noted, prior to TEFRA, this dichotomy did not exist. Id.

The Tax Court’s discussion concerning TEFRA’s provisions is insightful, particularly in drawing a distinction between matters that may be subject to a partnership proceeding (and therefore must involve partnership items) and matters that may not be subject to such proceedings (because the dispute arises from nonpartnership items). The court emphasized the difference between partnership and nonpartnership proceedings: If the tax treatment of a “partnership item” is at issue, the statute requires the matter to be resolved at the partnership level.

Respondent has no authority to assess a deficiency attributable to a partnership item until after the close of a partnership proceeding, and may be enjoined from making premature assessments. Special rules apply to settlement agreements. Special statutes of limitations apply to assessment of deficiencies attributable to partnership items. Id. at 787-88 (citations omitted) (emphasis added).

The Tax Court proceeded to examine the statutory pattern, along with a congressional conference report, to determine that “administrative and judicial resolution of disputes involving partnership items [is] to be separate from and independent of disputes involving nonpartnership items.” Id. at 788. Based on this reasoning, partnership items may be considered only in the partnership proceeding and must be separate from a partner’s personal case. Id.

Through its discussion of separate partnership proceedings, the court impliedly-if not directly in its comment on special statutes of limitations-determined that partnership proceedings follow procedures dictated under TEFRA, while all nonpartnership matters on a partner’s federal income tax return still are subject to existing administrative and judicial resolution procedures in determining a partner’s tax liability. 2. Roberts v. Commissioner Petitioners were partners in three partnerships organized to explore for oil and gas (collectively, the “partnerships”). Roberts, 94 T.C. at 853-54.

After respondent filed a notice of deficiency pertaining to the partnerships, petitioners filed a motion to dismiss for lack of jurisdiction and to strike portions of respondent’s notice. Respondent determined deficiencies for the 1980 and 1983 taxable years, and additions to tax, per I.R.C. § 6653(a), for 1980, and per I.R.C. § 6653(a)(1) and (2) and I.R.C. § 6661(a), for 1983. Respondent issued the notice of deficiency on April 9,1987. Respondent’s notice of deficiency did not allow any of petitioners’ claimed losses from the partnerships.

The explanation of adjustments for each partnership provided by respondent included a variety of reasons for not allowing the partnership losses. Specifically, respondent claimed that petitioners did not show that the (1) the partnerships possessed the requisite profit objective with regard to their activities; (2) the amounts claimed as MAR’s were actually paid or incurred and, if paid or incurred, were ordinary and necessary trade or business expenses; and (3) the MAR’s and/or assumption agreements qualified as additions to petitioners’ basis in each partnership. Id. at 857.

Respondent also questioned whether the Minimum Annual Royalty obligations and the assumption of those obligations qualified “as additions to the partners’ amount at risk, since petitioners cannot claim losses greater than their amount at risk.” Id. at 857-58. The Tax Court identified the primary issues as whether it had jurisdiction to hear respondent’s claim that side agreements existed between petitioners and the sublessors, and whether those agreements protected petitioners against loss. Id. at 858. Before examining that issue, however, the court addressed the partnerships’ status under I.R.C. § 6231(a)(1).

The partnerships were subject to those provisions because they all were within TEFRA’s scope. The Tax Court noted that respondent did not begin any partnership proceedings for the partnerships and, as such, did not issue FPAAs for the partnerships’ 1983 taxable years. Significantly, the court determined the that the statute of limitations period for FPAAs concerning the 1983 taxable year expired on April 15, 1987. To support this conclusion, the court cited I.R.C. § 6229(a), but made no mention of I.R.C. § 6501.

The court was definitive in finding that no partnership proceedings could occur after that date for the partnerships’ 1983 returns when it said that “[cjlearly, there can be no partnership proceedings to adjust or modify the partnership items as reported on the 1983 returns of [the partnerships].” Id. at 857. 3. Cambridge Research & Development Group v. Commissioner Cambridge Research and Development Group (“Cambridge”) developed and licensed inventions. Cambridge Research & Dev. Group v. Comm’r, 97 T.C. 287, 288, 1991 WL 169192 (1991). While numerous limited partners were included in Cambridge, Lawrence M.

Sherman and Kenneth N. Sherman were the only general partners of the partnership. Id. at 291. The Cambridge tax return for 1983 was signed by Lawrence and indicated that Lawrence and Kenneth had equal interests in the partnership’s profit at the end of the taxable year. Id. at 289. In late 1987 or early 1988, respondent issued a Notice of FPAA.

Unless the Special Consent To Extend the Time To Assess Tax Attributable to Items of a Partnership (the “Consent”), executed by Lawrence on September 16, 1986, was effective to extend the three-year period of limitations for assessments attributable to partnership items, the FPAA was issued after the expiration of the period of limitations for assessment under I.R.C. § 6229(a). The primary question before the court was whether Lawrence had the authority to sign the Consent on behalf of the partnership.

Before resolving that matter, however, and most encouraging to the current petitioner, the court discussed the rules for assessing tax. Citing I.R.C. § 6501(a), the court first stated, the “general rule limiting the period during which a tax may be assessed provides that any assessment must be made within 3 years after the return for such tax is filed.” Id. Very succinctly, the court drew the line between the general rule and the rule for partnership items: “The general rule of

section 6501(

a) does not apply, however, to income tax attributable to partnership items. The period for assessing any income tax attributable to partnership items (or affected items) for a partnership taxable year will not expire before 3 years after the partnership files its information return for the taxable year in question.” Id. at 292 (citations omitted). The court relied on I.R.C. § 6229(

a) for the period of limitations for partnership items and cited I.R.C. § 6501(n)(2) to support its conclusion that I.R.C. § 6501(

a) does not apply to partnership items. Presumably, the court drew this inference from the language of I.R.C. § 6501(n)(2), which directs a partnership to

section 6229 for an extension of the period of limitations. 4. Wind Energy Technology Associates III v. Commissioner The primary issue in Wind Energy Tech. Assocs. III v. Comm’r, 94 T.C. 787, 788, 1990 WL 70792 (1990), was the validity of respondent’s Notice of FPAA when respondent failed to meet the notice requirement of

section 6223(d), which requires the IRS to mail notice of the beginning of an administrative proceeding at the partnership level to notice partners no later than 120 days before the actual FPAA is issued. Respondent mailed a notice of the beginning of an administrative proceeding to the partners of Wind Energy Technology Associates III (“Wind Energy”) on April 7, 1989. On April 14, 1989, respondent mailed the partners an FPAA. Id. at 788. With little debate or discussion, the Tax Court, citing Barbados # 7 Ltd. v.

Comm’r, 92 T.C. 804, 808, 1989 WL 35567 (1989), acknowledged that, under I.R.C. § 6229(a), assessment of tax attributable to partnership items is subject to a three-year statute of limitations. Id In a telling conclusion that appears to bolster defendant’s position that

section 6229(

a) serves as the statute of limitations for tax assessment on partnership items, the court noted that respondent’s motion for partial

summary judgment “seeks a determination that the FPAA was validly issued within the 3-year limitations period of

section 6229(a).” Wind Energy Tech. Assocs. III, 94 T.C. at 794. The court determined that the FPAA was not untimely under

section 6223(

d) and granted respondent’s motion in finding that the FPAA adhered to the request period of limitations. 5. Boydv. Commissioner Regal Laboratories, Ltd. (“Regal”), was a limited partnership that exploited various agricultural biotechnologies. Boyd v. Comm’r, 101 T.C. 365, 366, 1993 WL 452248 (1993). Petitioners invested $24,000.00 in Regal in 1983. Regal did not file a tax return for 1983; petitioners filed their 1983 federal income tax return on April 16, 1984, by which they claimed a $13,361.00 medical deduction and a $120,000.00 partnership loss. Id. at 367.

Respondent issued a notice of deficiency on June 2,1987 that disallowed the entirety of petitioners’ claimed partnership loss. This notice was invalid under

section 6501. Subsequently, respondent conducted an audit of Regal under TEFRA. On June 20, 1988, respondent issued a Notice of FPAA to Regal’s TMP. Mr. Boyd did not receive a copy of the FPAA or learn about the TEFRA partnership proceeding until February 6, 1991. Id. at 368. On June 7, 1991, as a result of the TEFRA audit of Regal, respondent issued a second notice of deficiency for 1983 that disallowed petitioners’ $120,00.00 partnership deduction and $6,089.00 of their medical deduction. Id. The validity of the notice date of this deficiency was the primary issue before the Tax Court. The court directly spoke to the relationship between

section 6501(

a) and

section 6229: In response to petitioners’ argument that

section 6501(

a) barred the assessment of taxes relating to their Regal deduction, the court concisely stated that “assessment of tax relating to their Regal partnership deductions is governed by the TEFRA partnership provisions, not by the general deficiency procedures under which petitioners’ first notice of deficiency for 1983 was issued.” Id. at 369. The court further explained that the general assessment of income tax must “generally be assessed within the later of 3 years after the return is filed or the due date of the return,” as under I.R.C. § 6501(

a) and (b). In the instance of tax attributable to partnership items, which petitioners’ loss would be labeled,

section 6501(

a) does not apply and such partnership items must be assessed pursuant to

section 6229(a). Boyd, 101 T.C. at 370 (citing Cambridge Research & Dev. Group, 97 T.C. at 292). Based on its analysis of the facts, the court determined that the second deficiency notice was timely because petitioners did not elect to be subject to the partnership proceeding involving Regal. As a consequence, their $120,000.00 deduction for Regal’s loss was converted into a nonpartnership item when respondent mailed the notice of the proceeding to Mr. Boyd on February 6, 1991.

Id. at 370; see I.R.C. § 6223(e)(2)(B) (when partnership proceeding is final, partner may have decision apply to him; failure to elect such application converts partnership items of partner for taxable year of proceeding into nonpartnership items). Under I.R.C. § 6229(f)(1), respondent must assess tax attributable to converted nonpartnership items within one year of the date of conversion. Based on the issuance of the notice of proceeding on February 6, 1991, the IRS had until February 6, 1992 to issue the notice of deficiency. Hence, the court found that the notice issued on June 7, 1991, satisfied

section 6229(

f) and determined that the notice was timely. Id. at 370-71. 6. Rhone-Poulenc Surfactants & Specialties, L.P. v. Commissioner 1) The Rhone-Poulenc majority Despite the apparent support for plaintiffs position in the above cases, plaintiff faces an obstacle to its contention that well-settled law directs that I.R.C. § 6229(

a) serve as the statute of limitations period for partnership items. Defendant relies upon a 2000 United States Tax Court opinion that restates that court’s understanding of

section 6229. The court held that “section 6229 extends the

section 6501 period [of limitations] with respect to tax attributable to partnership items or affected items.” Rhone-Poulenc Surfactants & Specialties, L.P. v. Comm’r, 114 T.C. 533, 542, 2000 WL 863142 (2000). This represents, obviously, a different statutory

interpretation than presuming that

section 6229 is a separate statute of limitations unrelated to

section 6501 with regal'd to partnership items. Petitioner was a corporate partner in the Rhone-Poulenc partnership. A transfer of property took place between petitioner and another subsidiary, and the property at issue concerned “assets related to businesses carried on by those two subsidiaries.” Id. at 536. The partnership described “the transfer as a contribution of property to the partnership in exchange for an interest in the partnership^]” whereas respondent considered the transfer a sale. Id.

The partnership filed its 1990 income tax return on either September 15 or 17, 1991, id. at 537; on September 12, 1997, the IRS issued a Notice of FPAA to petitioner for the 1990 taxable year. Id. at 536. The parties did not dispute that the case involved at least one partnership item. Id. Much like the arguments in the case at bar, a primary issue for resolution in Rhone-Poulenc was the interplay between I.R.C. § 6229 and I.R.C. § 6501. Petitioner argued that respondent’s assessment of tax with regard to the FPAA was barred by the three-year period of limitations found in I.R.C. § 6229(a). Id. at 537-38.

In this regard petitioner claimed that

section 6501(

a) is not the correct period of limitations for tax attributable to any partnership item, id., and that

section 6229(

a) constitutes an independent, stand-alone period of limitations distinct from the

section 6501(

a) time period, id. at 537. Not surprisingly, respondent disagreed with the separate categorization of sections 6229 and 6501, arguing that

section 6229(

a) serves as an “ ‘add on’ that, in some circumstances, extends the period prescribed by

section 6501[a] but would never subtract from that period.” Id. Respondent further contended that, per I.R.C. § 6501(e)(1)(A), the general period of limitations under

section 6501(

a) actually was extended to six years because petitioner’s return constituted a substantial omission of income due to petitioner’s failure to report the gains attributable to the transfer. Id. at 538. A majority of Tax Court judges concluded that I.R.C. § 6501(

a) provided the statute of limitations for any tax imposed under the I.R.C. Id. at 551. They emphasized that “[sjeetion 6501 contains no exception for deficiencies attributable to partnership items.” Id. In reaching its conclusion that sections 6229 and 6501 contain alternative periods for assessing tax on partnership items and that, therefore, the later-expiring period governs a particular case, id. at 540-41, the court presented a variety of considerations. First, it determined that the language of

section 6501 unequivocally states the period of limitations with respect to “any tax imposed by this title.” I.R.C. § 6501(a) (emphasis added). Comparatively, while

section 6501 provides a maximum time limit for the assessment of any tax,

section 6229 provides a minimum period of time for assessment of tax attributable to partnership items. Rhone-Poulenc, 114 T.C. at 542. In essence, the court’s reading of the statutory sections rendered

section 6229 a complement to

section 6501 because

section 6229 can end before or after the time period stipulated in

section 6501. Id. The court also addressed petitioner’s contention that TEFRA’s partnership provisions and other provisions of the I.R.C. demonstrate that

section 6229(

a) serves as a separate, “stand-alone” statute of limitations for partnership items. Id. at 544. The court rejected this argument and restated that

section 6229(

a) merely creates a minimum time period for assessing adjustments attributable to partnership items. The court went on to distinguish

section 6229(a)’s language of “shall not expire before” from other statute of limitations provisions, and determined that if Congress had intended to establish an entirely separate statute of limitations under

section 6229, it would have mirrored the statute of limitations language of

section 6501(a). Id. at 545. Additionally, based on the notion that superfluous

interpretations of statutes should be avoided and its clear-language reading of the statute, the court dismissed petitioner’s contentions that sections 6229(c)(1)(

A) and 6229(b)(3) are superfluous. Petitioners argued that, if

section 6501 controls the statute of limitations for partnership items,

section 6229(c)(1)(

A) is superfluous “because

section 6501(c)(1) contains an identical unlimited assessment period.” Id. at 547. In an interesting distinction, the court determined that

section 6501(c)(1) casts a broad net for all fraudulent tax activity and therefore would apply to a partner who filed a fraudulent individual or corporate return, even if the partnership return was not fraudulent. On the other hand, the court read

section 6229(c)(1) as specifically addressing partnership returns and determined that it extended the period of limitations for partners if a partner intentionally participated or signed a fraudulent partnership return. Id. at 547-48. The court considered the relationship between these two subsections only a “possible limited overlap.” Id. at 549. Similarly, in its rejection of petitioner’s argument that

section 6229(b)(3) is superfluous in relation to

section 6501(c)(4), the court concluded that

section 6229(b)(3) added the requirement of an explicit mention of partnership items in the agreement. Id. at 550. Finally, the court rebuffed petitioner’s policy arguments through discussion of

section 6229(c)(3), which provides that tax attributable to partnership items may be assessed at any time when a partnership return is not filed. Id. at

Section 6501(c)(3) stops the period for assessment for nonfilers. The court determined that

section 6229 provides no similar provision for partners who fail to file their own returns because the period of limitations from

section 6501 “never begins to run for a nonfiling partner.” Id. 2) The Rhone-Poulenc dissents Judges Parr and Foley issued full dissents. Judge Parr cited a House conference report that includes language that mirrors

section 6229(a). See H.R.Rep. No. 97-760, at 606 (1982) (“The period for assessment with respect to partnership items (or affected items) for any partnership taxable year shall not expire before 3 years from the date of filing the partnership return or, if later, the last date prescribed for filing such return determined without extensions.”). Based on this language, Judge Parr found it obvious that the period of limitations from

section 6229(

a) was “no more than the time that is the later of 3 years from the date that the partnership return was filed or the latest date prescribed for filing the partnership return without extensions.” Rhone-Poulenc, 114 T.C. at 565. Precedentially, Judge Parr cited prior Tax Court decisions that dominantly construed

section 6229(

a) as the limitations period for the assessment of partnership items. Id. at 565 (Parr, J., dissenting); see Roberts, 94 T.C. at 857 (citing

section 6229(

a) for the limitations period for issuing an FPAA for partnership returns in question); Wind Energy Tech. Assocs. III, 94 T.C. at 788 (1990) (“Section 6229(

a) provides generally for a 3-year period of limitations for the assessment of tax attributable to partnership items.”); Barbados # 7, 92 T.C. at 808 (1989) (“Section 6229(

a) provides for a 3-year limitation period for the assessment of any tax attributable to a partnership item.”). In response to the majority’s reasoning in regard to the “overlap” between sections 6229(b)(2) and 6501(c)(4), Judge Parr reasoned that

section 6501(c)(4)’s requirement that extension agreements specifically state that the extension is applicable to partnership items implies that

section 6501(e)(4) is not generally applicable to partnership items. Rhone-Poulenc, 114 T.C. at 567. Judge Foley, in dissent, challenged the majority’s characterization that the statutory scheme under review as “ ‘distressingly complex’ ” and “ ‘not a model of clarity.’ ” Id. at 569. Instead, he relied on the plain meaning of the statute and followed the defined period of limitations as stated in

section 6229(a). Id. He questioned the majority’s use of strict statutory

interpretation in favor of the Government, in essence asserting that the majority went too far in attempting to reconcile the relationship between the sections in question. Judge Foley emphasized the prudence of interpreting

section 6229(

a) as the only assessment period for TEFRA partnership items. By adhering to such an

interpretation, “adjustments in the tax treatment of partnership items [will occur] in one proceeding at the partnership level, rather than in separate proceedings with the partners.” Id. at 569. 7. Callaway v. Commissioner In Callaway v. Comm’r, 231 F.3d 106 (2d Cir.2000), the court considered whether a wife’s share of her deceased husband’s partnership assets converted to nonpartnership assets at the same time as her deceased husband’s share of partnership assets converted to nonpartnership assets.

The court ultimately ruled that the wife’s partnership assets converted to nonpartnership assets at the same time as the deceased husband’s. Additionally, plaintiff claimed the statute of limitations on assessment of these converted partnership items had expired, and the court agreed. In order to reach this conclusion, the court analyzed I.R.C. § 6229(

f) and I.R.C. § 6501(d).

Section 6229(

f) requires that, if certain events cause a partnership item to become a nonpartnership item, the period for assessments on that item “shall not expire before the date which is 1 year after the date on which the items become nonpartnership items.” I.R.C. § 6229(f).

Section 6501(d), on the other hand, requires assessment be made within a maximum of three years if a prompt assessment properly is requested under certain procedures. The husband’s estate had requested a prompt assessment on an item that had gone from partnership to nonpartnership status, thus triggering both provisions. The court held that

section 6501(

d) applies to assessments attributable to partnership items. Therefore,

section 6501(

d) was inapplicable if the items had converted and the time under

section 6229(

f) had expired. The court construed I.R.C. § 6229(

a) as “superseding] the individual partner’s general three-year statute of limitations” of I.R.C. § 6501(a). Callaway, 231 F.3d at 110, 121. 8. Andantech L.L.C. v. Commissioner Subsequently, in a complex matter involving a partnership that reported losses on its federal tax return based on the acceleration of income from leases on personal property which was then paid to others, the D.C. Circuit affirmed the Tax Court’s understanding of the relationship between I.R.C. § 6501 and I.R.C. § 6229(a). Andantech L.L.C. v. Comm’r, 331 F.3d 972, 973, 976 (D.C.Cir. 2003). The D.C. Circuit approved of the Tax Court’s reason for finding that

section 6501 serves as the general period of limitations for assessing any tax and that

section 6229(

a) provides a minimum period that may extend

section 6501 for assessing tax attributable to partnership items. Id. at 976. The court focused on the language of the statutory provisions to affirm the Tax Court: First, the court agreed that the plain meaning of

section 6501 emphasizes that it refers to all taxes applicable under the I.R.C. Id. Comparatively,

section 6229(

a) references

section 6501 through its “[e]xcept as otherwise provided in this section” language. Id. 976-77. Further, the court approved of the Government’s argument that the broad scope of

section 6501, combined with the phrase “shall not expire” from

section 6229(a), leads to the conclusion that

section 6229 is not a separate, independent statute of limitations. Id. at 977. This language dictates a minimum period that may extend

section 6501’s period of limitations in the case of partnership items, but it does not create an independent statute of limitations. Id. Finally, the court was satisfied that the Tax Court’s reasoning was “reasonable, persuasive, and ultimately convincing” in the determination that

section 6501 provides the statute of limitations for all assessments under the I.R.C. and that

section 6229(

a) may be used to extend that period of limitations. Id. 9. Weiner v. United States In Weiner v. United States, 389 F.3d 152 (5th Cir.2004), plaintiffs sought a refund of partnership taxes paid to the government on the basis that the statute of limitations had run on the period of assessment. Key to plaintiffs’ argument was whether “the FPAA statute of limitations, found in § 6229(a), is ... a ‘partnership item’ ” for the purposes of I.R.C. § 7422(h). Id. at 156. If the FPAA was a partnership item, the refund claim jurisdictionally would be barred by

section 7422(h). If it was not a partnership item, the suit could proceed. Ultimately the court held that the

section 6229(

a) limitation was a partnership item and thus jurisdictionally was barred from consideration in the refund suit. In a

section entitled “Statutory Background,” the court stated that “[t]he IRS is given three years from the later of (1) the date a partnership return is due, or (2) the date the partnership return is filed, to issue an FPAA.” Weiner, 389 F.3d at 154-55. This language appears to presume that

section 6229(

a) is a period of limitations. However, such a decision was not necessary to the court’s holding-whether the applicable period was

section 6501 as extended by

section 6229 or

section 6229 alone made no difference to resolving the critical issue of whether the FPAA limitation was a partnership item or a non-partnership item. Furthermore, the interplay between sections 6229 and 6501 was not in dispute in Weiner, and it was not analyzed by the court. IV. Plain meaning of the statute 1. Plain meaning and canons of construction Statutory

interpretation begins with the language, or plain meaning, of the statute. Exxon Mobil Corp. v. Allapattah Servs., Inc., — U.S. -, -, 125 S.Ct. 2611, 2626, 162 L.Ed.2d 502 (2005); Norfolk Dredging Co., Inc., v. United States, 375 F.3d 1106, 1110 (Fed.Cir.2004) (citing Williams v. Taylor, 529 U.S. 420, 431, 120 S.Ct. 1479, 146 L.Ed.2d 435 (2000)). However, “[wjhether or not words of a statute are clear is itself not always clear.” Tex. State Comm’n for the Blind v. United States, 796 F.2d 400, 406 (Fed.Cir.1986) (en banc).

In such a situation, certain rules called canons of construction are useful in extracting the plain meaning from the statute. These canons are not binding, mandatory rules; instead, they serve as “guides that ‘need not be conclusive.’” Chickasaw Nation v. United States, 534 U.S. 84, 94, 122 S.Ct. 528, 151 L.Ed.2d 474 (2001) (quoting Circuit City Stores, Inc., v. Adams, 532 U.S. 105, 115, 121 S.Ct. 1302, 149 L.Ed.2d 234 (2001)). Such guides “are designed to help judges determine the Legislature’s intent as embodied in particular statutory language.” Id.

The plain meaning of a statute comes from its “text and structure.” Norfolk Dredging Co., 375 F.3d at 1110. This meaning “of a statute must, in the first instance, be sought in the language in which the act is framed, and if that is plain, and if the law is within the constitutional authority of the lawmaking body which passed it, the sole function of the courts is to enforce it according to its terms.” Caminetti v. United States, 242 U.S. 470, 485, 37 S.Ct. 192, 61 L.Ed. 442 (1917); see also Chevron U.S.A., Inc. v. Natural Res. Def.

Council, Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984) (“If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress.”). Although the statutory provision at issue must be read within the context of the entire statute, see K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 291, 108 S.Ct. 1811, 100 L.Ed.2d 313 (1988), it also should be read in “its contemporary legal context,” see Cannon v.

Univ. of Chicago, 441 U.S. 677, 698-99, 99 S.Ct. 1946, 60 L.Ed.2d 560 (1979), because “courts must presume that a legislature says in a statute what it means and means in a statute what it says there[,]” Conn. Nat’l Bank v. Germain, 503 U.S. 249, 253-54, 112 S.Ct. 1146, 117 L.Ed.2d 391 (1992). If examination of the statute in light of these rules shows that “the language is clear and fits the case, the plain meaning of the statute generally will be regarded as conclusive.” Norfolk Dredging Co., 375 F.3d at 1110.

Once plain meaning is ascertained, it is inappropriate for courts to attempt to interpret a statutory provision. However, it is not always possible to ascertain plain meaning; the wording of a statute might be ambiguous. “Ambiguity in a statute ... normally means two or more alternative readings, all having some claim to respect and none leading to absurd results.” Hart v. United States, 218 Ct.Cl. 212, 585 F.2d 1025, 1029 (1978). In such cases, a court must “resort to legislative history and other extrinsic aids.” Id. 2.

Presumptions and their use Plaintiff and defendant cite contrary rules of construction that they argue should be used to resolve any remaining ambiguity in their favor. Plaintiff presents a rule of construction that presumes that Congress intended remaining ambiguities in a tax collection statute to be construed in favor of the taxpayer. Defendant presents a rule of construction that presumes that Congress intended remaining ambiguities in a tax collection statute of limitations to be construed in favor of the Government.

Plaintiff and defendant agree that these cross-presumptions come into play only if the statute is ambiguous. However, neither party directly addressed the issue of whether these presumptions come into play before or after the legislative history is examined. The court concludes that the inquiry should proceed in the following order. First, a statute should be given its plain meaning, if at all possible.

See, e.g., Allapattah Servs., 125 S.Ct. at 2626 (“[T]he authoritative statement is the statutory text, not the legislative history or any other extrinsic material.”); Caminetti, 242 U.S. at 485, 37 S.Ct. 192 (“It is elementary that the meaning of a statute must, in the first instance, be sought in the language in which the act is framed, and if that is plain ... the sole function of the courts is to enforce it according to its terms.”). However, if a statute has two or more plausible alternative readings and thus is deemed ambiguous, the next step is for the court to look to the legislative history.

See Hart, 585 F.2d at 1029 (holding that, if statute is ambiguous, court may “resort to legislative history and other extrinsic aids.”); see also Chevron, U.S.A. Inc., 467 U.S. at 842-43, 104 S.Ct. 2778 (indicating that purpose of court is to give effect to intent of Congress). Reliable legislative history, which is clear and unambiguous, should be regarded as a better indicator of Congress’s intentions than a presumption. Thus, in the case of an ambiguous statute, the legislative history should be examined before a presumption is applied.

See Chickasaw Nation, 534 U.S. at 94, 122 S.Ct. 528 (holding that canons of construction are “designed to help judges determine the Legislature’s intent as embodied in particular statutory language”). However, if the legislative history is equivocal and does constitute a reliable indicator of the intentions of Congress, any remaining ambiguities should be resolved by resort to any applicable presumption.

Although the court recognizes that other courts have employed presumptions as part of the plain-meaning analysis, the court deems that it is appropriate to use such a presumption after consulting the legislative history. In a hypothetical case in which a tax statute of limitations was ambiguous, but the legislative history was crystal clear in favor of the taxpayer, the will of Congress would be thwarted by reference to a presumption that foreclosed consulting the legislative history.

If the will of Congress is to be implemented, it makes more sense to divine the will of Congress from its own words (if the source is authorative and the meaning clear), rather than a judge-made presumption. In this case, in particular, the rule construing ambiguities in tax statutes of limitations in favor of the Government would mean that the legislative history should not be examined. Out of an abundance of caution, therefore, the court would prefer to engage in this analysis.

Because of the ultimate disposition of the case-a ruling in favor of defendant based upon a presumption in the form of the rule of construction that favors the Government-it proves of no significance in the instant case if the rule of construction is considered before or after the legislative history. In either case, judgment would be for defendant. Therefore, the cross-presumptions-in favor of the taxpayer and in favor of the Government-will not be considered as part of the plain-language analysis. Instead, they come into play after the legislative history is examined. 3.

Analysis of plain meaning and possible ambiguities The meaning of

section 6229 must first be sought in its language, as construed in light of the context of the entire statute, including

section 6501 and the various sub-provisions of the two sections. See, e.g., K Mart Corp., 486 U.S. at 291, 108 S.Ct. 1811. If the meaning of the statute is clear, that is as far as the court may go. Norfolk Dredging Co., 375 F.3d at 1110. However, the court finds in the instant case that the statute has “two or more alternative readings, all having some claim to respect and none leading to absurd results.” Hart, 585 F.2d at 1029. It is therefore ambiguous, and the court is required to examine extrinsic materials to determine Congress’s intent. The parties’ arguments will be examined in detail. 1) The language of

section 6229(

a) and

section 6501(

a) The cause of the uncertainty in the

interpretation of

section 6229 is at its heart twofold. First, I.R.C. § 6229 titles itself “[p]eriod of limitations” and refers to periods of limitation throughout. However, in order to have the stature of a separate statute of limitations,

section 6229 must somehow trump I.R.C. § 6501, which by its terms applies to “any tax imposed by this title.”

Section 6229 does not explicitly state that it is an exception to

section 6501’s more general rule. Second, while

section 6229(

a) styles itself a period of limitations, it does not use language traditionally associated with statutes of limitations. Instead uses the phrase “shall not expire before.” I.R.C. § 6229(a). This leaves both sides of the question with respectable arguments in their favor. First, plaintiff claims the entire issue is settled by the first seven words of

section 6229, when it says, “Except as otherwise provided in this

section ____” I.R.C. § 6229(a). Plaintiff argues that this phrase confines the reader to

section 6229 when interpreting the limitation provision and thereby excludes from consideration

section 6501. Plaintiff argues that Congress “could not have focused with greater specificity here.” Pl.’s Br. filed Jan. 4, 2005, at 20. The court strongly disagrees. If Congress had wished to create a clear exception to

section 6501, it could have mentioned it by name or used a phrase such as “[njonwithstanding any provision of law imposing restrictions on the assessment and collection of deficiencies,” as it has elsewhere for that purpose. See I.R.C. § 7485(a) (2000). The court agrees with defendant that the “except as otherwise provided in this section” language does not support plaintiffs cause. If

section 6229(

a) is read to operate as an extension, as defendant argues, the “except as otherwise provided” language would refer internally to circumstances within

section 6229 that modify this extension. Plaintiff overreaches when it claims that seven words may answer such a complicated question. Likewise, defendant contends that the issue is settled by I.R.C. § 6501(a)’s statement that it applies to “any tax imposed by this title.” But this is also too simple. Plaintiff contends that

section 6229(

a) was intended as an exception to

section 6501(a). If plaintiffs

interpretation is correct, it does not matter if

section 6501(

a) announces its application to all taxes imposed within the title, because-section 6229(

a) would limit its reach. Were

section 6229(

a) intended as an exception, the “basic principle of statutory construction that a specific statute ... controls over a general provision,” HCSC-Laundry v. United States, 450 U.S. 1, 6, 101 S.Ct. 886, 67 L.Ed.2d 1 (1981), would elevate

section 6229 over

section 6501. Therefore, defendant’s argument also assumes the result it is trying to prove. The statute must be examined in more detail to determine if it was intended to provide a separate statute of limitations for partnership items as an exception to

section 6501. Plaintiff argues that the title of

section 6229, “Period of limitations for making assessments,” should resolve the issue in its favor, i.e., Congress made plain that it enacted a period of limitations rather than an extension. The court does not agree that this approach is conclusive. While plaintiffs reading is simple and perhaps more likely, defendant’s

interpretation of the caption is also viable. Even if

section 6229 is an extension of time-this

section concerns the “period of limitations for making assessments,” after all-it might extend that period of limitations. Because two possible readings of this title are apparent, it is ambiguous. Plaintiff also contends that, because

section 6229 contains a list of exceptions to the period of limitations and does not mention

section 6501, under the maxim expressio unis est exclusio alterius the damage must not have meant to exclude

section 6501 as an exception. Again, the court disagrees. If

section 6229(

a) is read to incorporate by reference the period of

section 6501(a), no need would be present for an exception excluding

section 6501. Plaintiffs argument is bootstrapping. Plaintiff contends that the phrase “shall not expire before” is used elsewhere to denote separate periods of limitations. It cites I.R.C. § 1033(a)(2)(C) (“[The] statutory period for assessment of any deficiency ... shall not expire prior to the expiration of 3 years from the date the Secretary is notified by the taxpayer----”) and I.R.C. § 2032A(f) (“Statute of limitations. — If qualified real property is disposed of or ceases to be used for a qualified use, then — (1) the statutory period for the assessment of any additional tax under subsection (

e) attributable to such disposition or cessation shall not expire before the expiration of 3 years from the date the Secretary is notified ....”) as creating separate statutes of limitations that supersede the general rule of

section 6501(a). In plaintiffs view Congress’s use of the phrase elsewhere in the I.R.C. to create a separate period of limitations supports the proposition that Congress did the same through

section 6229(a). Plaintiff cites the Tax Court’s treatment of these two provisions to support its

interpretation. Vaira v. Comm’r, 52 T.C. 986, 1003, 1969 WL 1731 (1969) (interpreting

section 1033(a)(2)(C)), and Stovall v. Comm’r, 101 T.C. 140, 1993 WL 283325 (1993) (interpreting

section 2032A(f)). Defendant concedes that the above provisions might “in a technically linguistic sense ... be considered ‘separate’ periods of limitation.” Def.’s Br. filed Jan. 31, 2005, at 16 n. 11. Defendant distinguishes Stovall and Vaira on the ground that sections 1033(a)(2)(

C) and 2032A(

f) were held to be “separate” periods of limitations, but not “exclusive” periods. Def.’s Br. filed Jan. 31, 2005, at 16 n. 11. Instead, defendant shows how these statutes can contemplate an additional period of assessment that can occur even if the time period in I.R.C. § 6501(

a) has expired.

Section 2032A(

f) contains a triggering event: the disposition of certain qualified real property or its conversion to an unqualified use. When that event occurs, the “shall not expire before” language of

section 2032A(

f) extends the period of assessment, even if the

section 6501(

a) time limit has expired. However, if the triggering event does not occur,

section 6501(

a) applies in due course. This is certainly a “separate” period of limitations, but is not exclusive of

section 6501(a). Much the same is true of

section 1033(a)(2)(

C) in the context of taxes on income from involuntary conversions of property, except that the triggering event is the notification of the Secretary regarding the purchase of replacement property. Defendant also cites two other statutes in which Congress uses the “shall not expire before” language as a minimum or extended period. I.R.C. §§ 183(e)(4), 453(e)(8). It is apparently undisputed that both create an extended period of limitations with the “shall not expire before” language. Plaintiff has not cited to the court’s satisfaction any provision in which Congress uses the “shall not expire before” language to trump

section 6501(a)’s more general rule on the time limit of assessments. When Congress uses this phrase in the I.R.C., it is usually language that indicates an extension of the basic rule of

section 6501(a). However, the fact that Congress usually uses this phrase to mean an extension does not conclusively establish that it so intended in

section 6229. 2) Internal consistency The meaning of

section § 6229(

a) cannot be determined simply by comparing its language to the language of

section 6501(a). Thus, the court must proceed to read the statute in the context of its other provisions and subprovisions. Plaintiff points out that there are other references within

section 6229(

a) to the period specified or described in

section 6229(a). See, e.g„ I.R.C. § 6229(b)(1), (b)(3), (d). Defendant counters that all references to a period in subsection (

a) refer to the language “the period for assessing any tax imposed by subtitle A” as extended by the extension provided for by the “shall not expire before” provision. See I.R.C. § 6229(a). In other words, defendant argues that references to

section 6229(a)’s period are actually references to

section 6501’s limitation period, plus any time added by the possible extensions included within

section 6229. The court finds plaintiffs

interpretation to be more likely. References to “extensions” and “suspensions” of a period “described” or “specified” in

section 6229(

a) read as if they are referring to a period actually described fully within the subsection. The only way a period could be described fully in the subsection is under plaintiffs

interpretation of

section 6229(

a) as a poorly worded statute of limitations. Defendant’s

interpretation-that the period described in

section 6229(

a) is actually the period described in

section 6501(a), plus any extension within

section 6229, is labyrinthine. However, despite the complicated nature of this reading, it is a plausible one. Congress could have made reference to the “period described in subsection (a)” as a shorthand method of describing the

section 6501 period, as modified by

section 6229. Nothing in the language itself conclusively proves otherwise. Thus, it is a reading that has “some claim to respect,” Hart, 585 F.2d at 1028, and thus would qualify the statute as ambiguous if it does not “lead[ ] to absurd results.” Id. Plaintiff and defendant go through the subprovisions of sections 6229 and 6501, attempting to conjure such “absurd results” from the interplay of the language. The court has considered each of these arguments, including those not explicitly mentioned here, and found them to be unpersuasive.

Nothing is “absurd” about either reading; even after examining the subprovisions in more detail, ambiguity remains. Therefore, the court concludes that the statute is ambiguous. Two of these arguments, regarding sections 6229(b)(3) and 6229(b)(1)(B), will be set out in more detail. First, plaintiff and amicus argue that defendant’s reading of

section 6229(

a) cannot be correct because it renders

section 6229(b)(3) meaningless.

Section 6229(b)(3) provides that agreements pursuant to

section 6501(e)(4) are only applicable to the period in

section 6229(

a) if they expressly provide that they govern partnership items. Plaintiff and amicus argue that, under the Government’s reading, such an extension under 6501(e)(4) would never be necessary. One can only obtain an extension under

section 6501(c)(4) if the three-year period of

section 6501(

a) is still open. If it is still open, one would not need an extension; and if it has closed, then the only extension available will be the one presented in

section 6229(a). No coordination with 6501(c)(4) would ever be necessary. However, the Tax Court majority in Rhone-Poulenc presented one possible

interpretation of the provision that does not render it meaningless. 114 T.C. at 549. Once again, if one presumes that the reference within

section 6229(b)(3) to the “period described in subsection (a)” refers to

section 6501(a)’s period, plus the extension of

section 6229(a), there is a plausible reading. In that case

section 6229(b)(3) reads, in effect, that extension agreements pertaining to the three-year period provided in 6501(a) (as already possibly extended by

section 6229(a)) are only operative if they explicitly apply to partnership-item taxes. Amicus deems this reading “ridiculous.” Amicus Br. filed May 4, 2005, at 13. The reading is convoluted, but possible. While amicus is correct that Congress could have said the same thing in a simpler way, or put the equivalent of

section 6229(b)(3) elsewhere in

section 6501 rather than in

section 6229, if this case has proved anything it is that Congress does not always write its statutes in the most punctilious of language. The court must deal with what it is given; and what it is given is a subprovision that may be read in two different ways. Neither reading yields ridiculous results. Second, amicus argues that the purpose of

section 6229(b)(1)(

B) would be defeated by defendant’s

interpretation of

section 6229(a). This

section reads in relevant part, “The period described in subsection (a) ... may be extended ... (

B) with respect to all partners, by an agreement entered into by the Secretary and the tax matters partner .... ” I.R.C. § 6229(b)(1). Under defendant’s

interpretation, according to amicus, the audit period for some partners will be longer than others. Therefore, the TMP will not always be able to extend the assessment period for “all partners.” Instead, he will only be able to extend it for those partners whose periods of assessment have been extended. Defendant does not respond to this argument. However, it appears unclear why amicus’s contention would necessarily be a problem. It does not strike the court as “absurd” that a TMP will be able to extend the assessment provisions only for those who have fallen under the

section 6229(

a) extension. It also does not necessarily seem absurd that some partners occasionally will be treated unequally as a result. Therefore, the court sees no absurdities in either reading of

section 6229(a). Both readings are plausible, and thus the statute is ambiguous under the Hart standard. Its plain meaning cannot be determined by reference to the text alone. V. Legislative history 1. The use and weight of legislative history If a statute remains ambiguous even after consideration of its plain meaning, a court may rely on legislative history to interpret the meaning of the ambiguous terms. Clary v. United States, 333 F.3d 1345, 1348 (Fed.Cir.2003); Madison Galleries, Ltd v. United States, 870 F.2d 627, 629 (Fed.Cir.1989); Martin J. Simko Constr., Inc. v.

United States, 852 F.2d 540, 542-43 (Fed.Cir.1988); Hart, 585 F.2d at 1029. However, the Supreme Court has counseled caution when examining legislative history, as it is often “murky, ambiguous, and contradictory.” Allapattah Servs., 125 S.Ct. at 2626-27. The Supreme Court emphasized: “[T]he authoritative statement is the statutory text, not the legislative history or any other extrinsic material. Extrinsic materials have a role in statutory

interpretation only to the extent they shed a rehable light on the enacting Legislature’s understanding of otherwise ambiguous terms.” Id. Not all legislative history is entitled to equal regard. The Federal Circuit and the Supreme Court have accorded different sources different weights, based upon how closely the history generally reflects the collective understanding of the members of Congress who drafted and voted upon the legislation. See, e.g., Allapattah Servs., 125 S.Ct. at 2626; Garcia v. United States, 469 U.S. 70, 76, 105 S.Ct. 479, 83 L.Ed.2d 472 (1984); Zuber v.

Allen, 396 U.S. 168, 186, 90 S.Ct. 314, 24 L.Ed.2d 345 (1969). The most persuasive sort of legislative history are the reports from the committees that studied, drafted, and proposed the legislation. Garcia, 469 U.S. at 76, 105 S.Ct. 479 (“In surveying legislative history we have repeatedly stated that the authoritative source for finding the Legislature’s intent lies in the Committee Reports on the bill____”); Zuber, 396 U.S. at 186, 90 S.Ct. 314 (“A committee report represents the considered and collective understanding of those Congressmen involved in drafting and studying proposed legislation.”).

However, committee reports are “not decisive,” but instead only “highly persuasive.” Bingham & Taylor Div., Va. Indus., Inc. v. United States, 815 F.2d 1482, 1485 (Fed.Cir.1987). Prior legislative history, such as previous versions of the same bill, is deemed less rehable than concurrent committee reports. The Supreme has held that “failed legislative proposals are ‘a particularly dangerous ground on which to rest an

interpretation of a prior statute____’” United States v. Craft, 535 U.S. 274, 287, 122 S.Ct. 1414, 152 L.Ed.2d 437 (2002) (quoting Pension Benefit Guar. Corp. v. LTV Corp., 496 U.S. 633, 650, 110 S.Ct. 2668, 110 L.Ed.2d 579 (1990)). The Court explained, “ ‘Congressional inaction lacks persuasive significance because several equally tenable inferences may be drawn from such inaction ____” Id. (quoting Cent. Bank of Denver, N.A. v. First Interstate Bank of Denver, N. A, 511 U.S. 164, 187, 114 S.Ct. 1439, 128 L.Ed.2d 119 (1994)).

Additionally, subsequent legislative history is also less reliable than concurrent committee reports. In Colt Indus., Inc. v. United States, 880 F.2d 1311, 1313 (Fed.Cir.1989), the Federal Circuit was presented with a committee report by the 92nd Congress purporting to set out the intentions of the 91st Congress regarding a law passed by the latter. The court held that such “Subsequent legislative history is worthy of little weight.” Id. at 1313 n.**; see also Jones v.

United States, 526 U.S. 227, 238, 119 S.Ct. 1215, 143 L.Ed.2d 311 (1999) (“[S]ubsequent legislative history is a hazardous basis for inferring the intent of an earlier Congress.” (internal quotations omitted)); United States v. Vogel Fertilizer Co., 455 U.S. 16, 34, 102 S.Ct. 821, 70 L.Ed.2d 792 (1982) (“[I]t is the intent of the Congress that [enacted the provision], not the views of the subsequent Congress ... that are controlling.”).

Subsequent legislative histoiy in the form of Blue Books, summaries of recently passed tax laws prepared by the staff of the Joint Committee on Internal Revenue Taxation, are given similarly restrained readings. The Supreme Court has made use of Blue Books in interpreting statutory provisions. See Fed. Power Comm’n v. Memphis Light, Gas & Water Div., 411 U.S. 458, 472, 93 S.Ct. 1723, 36 L.Ed.2d 426 (1973) (describing Blue Book under consideration in that case as “compelling contemporary indication” of congressional intent).

However, the Federal Circuit has ruled that, “[a]s a post-enactment explanation, the Blue Book

interpretation is entitled to little weight.” Fed. Nat. Mortgage Ass’n v. United States, 379 F.3d 1303, 1309 (Fed.Cir.2004). Statements of agency officials to Congress also have persuasive authority. In Lindahl v. Office of Pers. Mgmt., 470 U.S. 768, 788, 105 S.Ct. 1620, 84 L.Ed.2d 674 (1985), the Supreme Court gave weight to an agency official’s statement to Congress. The Court turned to legislative history in that case to aid in its

interpretation of a jurisdictional statute. The legislative history contained letters and oral testimony to a subcommittee by an Office of Personnel Management director. These statements interpreted both the existing law and Congress’s proposed changes.

The Supreme Court specifically rejected the notion that the views of agency officials could not be considered, pronouncing that “while Congress’s understanding of the enactment is of course our touchstone, in discerning what it was that Congress understood ‘we necessarily attach great weight to agency representations to Congress when the administrators participated in drafting and directly made known their views to Congress in committee hearings.’ ” Id. (quoting Vogel Fertilizer Co., 455 U.S. at 31, 102 S.Ct. 821 (internal quotations omitted) (giving agency determinations weight in

interpretation of tax law statute)). 2. Legislative history presented Plaintiff, defendant, and amicus have provided an impressive selection of legislative history regarding sections 6229 and 6501. This history stretches over more than twenty years, from 1976 to 1997. Because the court should assess the understanding of the enacting legislature-not prior or subsequent legislatures-chronology becomes important in the analysis of this legislative history. The TEFRA was enacted in 1978 by the 95th Congress. Accordingly, legislative history from prior and subsequent Congresses is deemed less persuasive as evidence of the legislature’s intent when enacting

section 6229. 1) History prior to the enacting Congress Plaintiff contends that the 1982 TEFRA had its genesis in a proposal by the Treasury Department to Congress (“the Treasury proposal”). This Treasury proposal, captioned “The President’s 1978 Tax Program,” was submitted to the House Ways and Means Committee for consideration on January 30, 1978. Under the law at the time of the Treasury proposal, the IRS could not audit a partnership’s assets at the partnership level. Instead, the IRS was required to audit each partner’s individual tax return that contained a partnership item.

The Treasury proposal argued that this procedure was inefficient for the IRS, because the IRS was forced to audit and litigate the same partnership items multiple times. Furthermore, relitigation of the same partnership item by different partners made it “impossible to obtain one final binding administrative determination of a tax issue arising from a partnership,” which resulted in a “lack of uniformity and consistency” in how partners were treated.

The President’s 1978 Tax Reduction and Reform Proposals: Hearings Before the House Comm, on Ways and Means, 95th Cong. 282 (1978) (reprint of the President’s 1978 Tax Program) (hereinafter Hearings on President’s 1978 Tax Proposal, 95th Cong. 282 (1978)). Furthermore, the problem had been made more acute by the use of complex, multi-tiered partnerships as tax shelters. These complex partnerships sometimes contained thousands of partners and were impossible for the IRS to audit properly, because, in order to determine the partnership assets, the IRS was required to audit each individual partner.

This task often was impossible for the IRS to accomplish during the statutory limitation period. The Treasury Department argued that the practical impossibility of detailed audits under current law led to “[partnership] shelter investors [not taking] the possibility of an extensive IRS audit seriously,” and thus “highly creative and ... questionable” partnership tax positions by these partnerships were going unchallenged. Id. at 288.

The Treasury Department proposed to remedy this problem by allowing the IRS to make determinations for partnership income, distribution, and other partnership items at the partnership level that are conclusive for the partners. Id. at 289.

More specifically to the instant case, the proposal also suggested that [t]he partnership level determination will be subject to the statute of limitations at the partnership level based upon the limitations rules now in effect generally____ Once the statute of limitations has run at the partnership level, the partnership’s return becomes final, and there can be no adjustment of items on a partner’s return attributable to the partnership. Id. The House Ways and Means Committee invited the Commissioner of the IRS, Jerome Kurtz, to explain the meaning of the proposal.

As a witness before the Committee, Commissioner Kurtz emphasized the need to make it easier for the IRS to audit large partnerships. Commissioner Kurtz testified that “the Service faces situations where the period of limitations on assessments for individual partners expires before the Service can obtain or locate the partnership return, complete the partnership audit, and follow

[…]