DETERMINATION OF PENALTIES AT PARTNERSHIP LEVEL.

SEC. 1238. DETERMINATION OF PENALTIES AT PARTNERSHIP LEVEL. (a) In General.—Section 6221 (relating to tax treatment determined at partnership level) is amended by striking “item” and inserting “item (and the applicability of any penalty, addition to tax, or additional amount which relates to an adjustment to a partnership item)”. (b) Conforming Amendments.— (1) Subsection (f) of section 6226 is amended— (A) by striking “relates and” and inserting “relates,”, and (B) by inserting before the period “, and the applicability of any penalty, addition to tax, or additional amount which relates to an adjustment to a partnership item”. (2) Clause (i) of section 6230(a)(2)(A) is amended to read as follows:111 STAT. 1027 “(i) affected items which require partner level determinations (other than penalties, additions to tax, and additional amounts that relate to adjustments to partnership items), or”. (3)(A) Subparagraph (A) of section 6230(a)(3), as added by section 1237, is amended by inserting “(including any liability for any penalties, additions to tax, or additional amounts relating to such adjustment)” after “partnership item”. (B) Subparagraph (B) of such section is amended by inserting “(and the applicability of any penalties, additions to tax, or additional amounts)” after “partnership items”. (C) Subparagraph (A) of section 6230(c)(5), as added by section 1237, is amended by inserting before the period “(including any liability for any penalties, additions to tax, or additional amounts relating to such adjustment)”. (D) Subparagraph (D) of section 6230(c)(5), as added by section 1237, is amended by inserting “(and the applicability of any penalties, additions to tax, or additional amounts)” after “partnership items”. (4) Paragraph (1) of section 6230(c) is amended by striking “or” at the end of subparagraph (A), by striking the period at the end of subparagraph (B) and inserting “, or”, and by adding at the end the following new subparagraph: “(C) the Secretary erroneously imposed any penalty, addition to tax, or additional amount which relates to an adjustment to a partnership item.”. (5) So much of subparagraph (A) of section 6230(c)(2) as precedes “shall be filed” is amended to read as follows: “(A) Under paragraph (1) (a) or (c).—Any claim under subparagraph (A) or (C) of paragraph (1)”. (6) Paragraph (4) of section 6230(c) is amended by adding at the end the following: “In addition, the determination under the final partnership administrative adjustment or under the decision of the court (whichever is appropriate) concerning the applicability of any penalty, addition to tax, or additional amount which relates to an adjustment to a partnership item shall also be conclusive. Notwithstanding the preceding sentence, the partner shall be allowed to assert any partner level defenses that may apply or to challenge the amount of the computational adjustment.”. (c) Effective Date.—The amendments made by this section shall apply to partnership taxable years ending after the date of the enactment of this Act.