By Sebastian B. Murolo, CPA, MBA
July 1, 2018

The Tax Court denied a married couple's claim that Sec. 6698 partnership penalties did not apply to their limited liability company (LLC) because they held it as a single member.

Facts: Argosy Technologies LLC filed returns for 2010 and 2011 on Form 1065, U.S. Return of Partnership Income, with Schedule B-1, Information on Partners Owning 50% or More of the Partnership, listing a husband and wife each as 50% owners. The returns included a statement that the partnership elected to be covered under TEFRA (Tax Equity and Fiscal Responsibility Act of 1982, P.L. 97-248) unified audit procedures. The IRS determined unpaid tax liabilities and imposed late-filing penalties under Sec. 6698 for the tax years. In 2014, the IRS issued a notice of intent to levy, which it sustained in a notice of determination. Argosy petitioned the Tax Court, contending it was a single-member LLC rather than a partnership and therefore could not be assessed a penalty under Sec. 6698, which pertains to failure to file a partnership return.

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