Tax Court Applies Equitable Tolling to Late-Filed BBA Partnership Petition for First Time and Finds for Taxpayer

By Priscilla Ayn Parrett

Did extraordinary circumstances prevent your partnership from timely filing a petition with the United States Tax Court? If so, you may still be able to have your case heard by the Tax Court. On September 21, 2026, the Tax Court issued its opinion in Kings Road Property, LLC v. Commissioner, 167 T.C. No. 11 (2026), holding for the first time that the 90-day deadline to file a petition under Internal Revenue Code (IRC) section 6234(a) is subject to equitable tolling. Following the court’s landmark decision in Big Apple Tompkins Realty LLC v. Commissioner, 167 T.C. No. 7 (2026)—which we discussed in this prior legal alert—the court in Kings Road went a step further and determined that equitable tolling applies, and actually applied equitable tolling to deem an untimely partnership petition timely.

Background

As discussed in our prior alert, in Big Apple the Tax Court held that the 90-day filing deadline in section 6234(a) is not jurisdictional, differentiating the Bipartisan Budget Act of 2015 (BBA) from the older Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) rules, under which the filing deadline had been treated as jurisdictional. See North Wall Holdings, LLC v. Commissioner, 165 T.C. 143 (2025). The court in Big Apple reserved the question of whether equitable tolling could apply because the parties had not raised the issue with the court.

In Kings Road, the Internal Revenue Service (IRS) examined the partnership’s 2020 return and mailed a Notice of Proposed Partnership Adjustment (NOPPA) on May 24, 2024. After retaining new counsel, Kings Road anticipated a Final Partnership Adjustment (FPA) and carefully tracked the deadline. Counsel calculated that the IRS had until April 21, 2025, to mail the FPA, and that a petition would then be due 90 days later. Counsel called the IRS on May 21, 2025, and was told that no FPA had been mailed and that there had been no activity on the account. Counsel also reviewed an IRS account transcript, which showed no FPA. Kings Road filed a protective petition on July 9, 2025.

Unbeknownst to Kings Road, the IRS had in fact mailed the FPA on March 25, 2025, nearly a month before the deadline. Both FPA packages were returned to the IRS as undeliverable, and the IRS did not mail the FPA to Kings Road’s current counsel. The petition, filed on July 9, 2025, was 16 days late.

The Court’s Holding on Equitable Tolling

Following the reasoning in Big Apple, the court confirmed that the section 6234(a) deadline is not jurisdictional. Going further, it held that nothing in the text or structure of section 6234(a) rebuts the presumption in favor of equitable tolling, distinguishing the BBA’s streamlined framework from TEFRA’s complex, multi-layered regime. To qualify for equitable tolling, the petitioner must establish (1) that it pursued its rights diligently, and (2) that extraordinary circumstances outside of its control prevented it from filing on time. The court emphasized that equitable tolling is “applied sparingly” and does not extend to a “garden variety claim of excusable neglect.”

The court found that Kings Road satisfied both prongs. Counsel for Kings Road obtained an IRS transcript, contacted the IRS after the deadline for mailing the FPA had passed, and filed a protective petition based on a reasonably calculated deadline. On extraordinary circumstances, the court found that the FPA packages were returned as undeliverable and that the IRS affirmatively misinformed Kings Road’s counsel that no FPA had been sent. The court noted that it was not suggesting that the returned mail alone would not be sufficient, but the combination of postal failure and IRS misinformation rose to the level of extraordinary circumstances.

Key Takeaways

Kings Road is a significant development, but partnerships should be aware that equitable tolling requires a significant factual showing. Partnerships that receive a NOPPA should diligently track the FPA timeline, maintain thorough records of all communications with the IRS, and file protective petitions where appropriate. Any partnership that has already filed a late petition or is considering doing so should consult counsel to evaluate whether the facts support an equitable tolling argument.