     Case: 15-20494   Document: 00513779145     Page: 1   Date Filed: 11/30/2016




        IN THE UNITED STATES COURT OF APPEALS
                 FOR THE FIFTH CIRCUIT
                                                               United States Court of Appeals

                                 No. 15-20494
                                                                        Fifth Circuit

                                                                      FILED
                                                              November 30, 2016

JAMES T. RODGERS; CLAUDETTE M. RODGERS,                          Lyle W. Cayce
                                                                      Clerk
             Plaintiffs - Appellants

v.

UNITED STATES OF AMERICA,

             Defendant - Appellee

************************************************************************
AVRUM M. STEIN; JOAN STEIN,

             Plaintiffs - Appellants

v.

UNITED STATES OF AMERICA,

             Defendant - Appellee

***********************************************************************
DAVID S. HOLLAND; JACQUE N. HOLLAND,

             Plaintiffs - Appellants

v.

UNITED STATES OF AMERICA,

             Defendant – Appellee
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CONSOLIDATED WITH 15-41176

LINVEL M. BINGHAM; VICKI L. BINGHAM,

                 Plaintiffs - Appellants

v.

UNITED STATES OF AMERICA,

                 Defendant - Appellee




                    Appeal from the United States District Court
                         for the Southern District of Texas
                    Appeal from the United States District Court
                          for the Eastern District of Texas


Before HIGGINBOTHAM, SMITH, and OWEN, Circuit Judges.
PATRICK E. HIGGINBOTHAM, Circuit Judge:
          These consolidated tax refund suits are the latest in a line of cases
stemming from faulty American Agri-Corp (“AMCOR”) investments. In the
1980s, Plaintiffs James and Claudette Rodgers, Avrum and Joan Stein, David
and Jacque Holland, and Linvel and Vicki Bingham (“Taxpayers”), were
partners in AMCOR partnerships that the Internal Revenue Service (“IRS”)
investigated as shams. 1 Taxpayers settled with the IRS and paid the amounts
assessed, but now seek refunds claiming that the IRS’s assessments were
untimely and that the IRS failed to issue notices of deficiency. Our decision in



    Irvine v. United States, 729 F.3d 455, 458 (5th Cir. 2013). Claudette Rodgers, Joan Stein
     1

and Jacque Holland are parties because they filed joint returns with their spouses. The others
were AMCOR partners.
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Irvine v. United States 2 forecloses both arguments. Here, like in Irvine, the
district courts lack subject matter jurisdiction to hear these refund claims.
Additionally, the variance doctrine forecloses Taxpayers’ argument that the
IRS failed to issue notices of deficiency because Taxpayers did not make such
an argument in their claims for refund before the IRS. Both district courts
granted summary judgment for the IRS. We affirm.
                           I.     Statutory Background
        The Tax Equity and Fiscal Responsibility Act of 1982 (“TEFRA”), which
amended the Internal Revenue Code, is the statute at the center of this case. 3
As the Supreme Court explained in U.S. v. Woods:
        A partnership does not pay federal income taxes; instead, its
        taxable income and losses pass through to the partners. 26 U.S.C.
        § 701. A partnership must report its tax items on an information
        return, § 6031(a), and the partners must report their distributive
        shares of the partnership’s tax items on their own individual
        returns, §§ 702, 704.

        Before 1982, the IRS had no way of correcting errors on a
        partnership’s return in a single, unified proceeding. 4

        In an effort to address these difficulties, Congress enacted TEFRA. 5
“TEFRA requires partnerships to file informational returns reflecting the


   2  729 F.3d 455 (5th Cir. 2013).
   3  Formerly codified generally at 26 U.S.C. §§ 6221–6233; P.L. 97–248 (Sept. 3, 1982), 96
Stat. 324. Alexander v. United States, 44 F.3d 328, 330 (5th Cir. 1995) (“In 1982, Congress
enacted [TEFRA] to improve the auditing and adjustments of income tax items attributable
to partnerships.” (internal citation omitted)). Notably, the Bipartisan Budget Act of 2015
repealed and replaced TEFRA, and struck 26 U.S.C. § 7422(h), the jurisdictional provision at
issue here. See Bipartisan Budget Act of 2015, Pub. L. No. 114–74 (Nov. 2, 2015), 129 Stat.
584; McNeill v. United States, No. 15-8095, WL 4611046, at *5 (10th Cir. Sept. 6, 2016)
(“Congress has recently revamped the process for auditing partnerships in order to permit
the IRS, beginning in 2018, to recoup taxes from the partnership itself rather than the
partners individually.” (citing Bipartisan Budget Act of 2015)).
    4 134 S. Ct. 557, 562 (2013).
    5 See id. at 563.

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partnership’s income, gains, deductions, and credits. Individual partners then
report their proportionate share of the items on their own tax returns.” 6
TEFRA established three categories for items considered in the tax treatment
of a partnership: “partnership items,” “nonpartnership items,” and “affected
items.” 7 TEFRA also created a two-stage procedure for the IRS to determine
partnership-related tax matters: first, the IRS assesses partnership items,
making any adjustments it deems necessary, and then it may initiate
proceedings against individual partners. 8
   A. Two-Stage Proceedings
        At the first step, “[i]f the IRS adjusts any partnership items on a
partnership’s informational income tax return, it must notify the individual
partners by issuing [a Notice of Final Partnership Administrative Adjustment
(“FPAA”)].” 9 When the FPAA becomes final, the IRS may tax the individual
partners for their shares of the adjusted partnership items. 10 Partners can,
however, challenge the FPAA in partnership-level proceedings before the


   6  Irvine, 729 F.3d at 459 (citing Weiner v. United States, 389 F.3d 152, 154 (5th Cir. 2004)).
   7  26 U.S.C. § 6231(a)(3)–(5) (“(3) Partnership item.--The term “partnership item” means,
with respect to a partnership, any item required to be taken into account for the partnership’s
taxable year under any provision of subtitle A to the extent regulations prescribed by the
Secretary provide that, for purposes of this subtitle, such item is more appropriately
determined at the partnership level than at the partner level. (4) Nonpartnership item.--The
term “nonpartnership item” means an item which is (or is treated as) not a partnership item.
(5) Affected item.--The term “affected item” means any item to the extent such item is affected
by a partnership item.”).
    8 See Woods, 134 S. Ct. at 563.
    9 Irvine, 729 F.3d at 460 (citing 26 U.S.C. § 6223; Duffie v. United States, 600 F.3d, 362,

366 (5th Cir. 2010)). See also Anisa Afshar, The Statute of Limitations for the Tefra
Partnership Proceedings: The Interplay Between Section 6229 and Section 6501, 64 TAX LAW.
701, 705 (2011) (“An FPAA is the TEFRA’s equivalent of a ‘notice of deficiency’ for
partnerships. The FPAA puts the partners on notice that the [IRS] disagrees with their
treatment of partnership items and intends to adjust it.” (citation omitted)).
    10 Curr-Spec Partners, L.P. v. C.I.R., 579 F.3d 391, 394–95 (5th Cir. 2009) (“After the

FPAA becomes final, the Commissioner may assess tax to the individual partners whose tax
returns for the year or years in question remain open under IRC § 6501(a), for those partners’
distributive shares of the adjusted partnership items.”).
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FPAA becomes final. Within 90 days after a FPAA issues, the “tax matters
partner” (“TMP”) 11 may file a petition for readjustment of the partnership
items in Tax Court or federal district court. 12 If the TMP does not challenge
the proposed partnership adjustments within 90 days, non-TMP notice
partners may file a petition for readjustment within the following 60 days. 13 If
a partnership-level challenge is filed–either by the TMP or by another partner–
each partner in the partnership is deemed a party to the case. 14 “Once the
adjustments to partnership items have become final, the IRS may undertake
further proceedings at the partner level to make any resulting ‘computational
adjustments’ in the tax liability of the individual partners.” 15
         “If a partner individually settles his or her partnership tax liability with
the IRS, ‘the partner will no longer be able to participate in the partnership
level litigation, and will be bound instead by the terms of the settlement
agreement.’” 16 “The TMP may bind ‘non-notice’ partners to a settlement
agreement resolving partnership items if the TMP expressly states in the
agreement that it ‘shall bind the other partners.’” 17
   B. Statutes of Limitations
         The general tax assessment statute of limitations is codified at § 6501(a).
It provides that when a tax return is filed, the IRS has three years from the
filing date to assess taxes. 18 However, when the taxes are attributable to a


   11 See 26 U.S.C. § 6231(a)(7).
   12 Id. § 6226(a) (in the federal district court for the district in which the partnership’s
principal place of business is located). Alternatively, the TMP may file in the Court of Federal
Claims. Id.
   13 Id. § 6226(b)(1).
   14 Id. § 6226(c)(1).
   15 Woods, 134 S. Ct. at 563 (citing 26 U.S.C. § 6231(a)(6)).
   16 Irvine, 729 F.3d at 460 (quoting Weiner, 389 F.3d at 155).
   17 Duffie, 600 F.3d at 367 (citing 26 U.S.C. § 6224(c)(3)(A)).
   18 See 26 § U.S.C. 6501(a) (“[e]xcept 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 . . .
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partnership item or affected item, TEFRA allows for that three-year statute of
limitations to be extended under certain circumstances. 19 Section 6229(a)
states that taxes that are
       attributable to any partnership item (or affected item) . . . 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).

       Section 6229(a) “does not establish an independent statute of limitations
for issuing FPAAs.” 20 This means, as this Court explained in Curr-Spec
Partners, L.P. v. Commissioner of Internal Revenue, that
           the Commissioner may issue an FPAA at any time, subject only
           to the practical limitation that the FPAA may affect only those
           partners whose individual returns remain open under IRC
           § 6501(a) or some extension thereto, such as the minimum
           period of IRC § 6229(a), before which the statute of limitations
           may not expire. Stated differently, the Commissioner is free to
           assess partnership-item tax on any taxpayer who, on his
           individual tax return, has taken advantage of the now-
           challenged partnership items within the preceding three years
           (or, in the event of an extension, within the extended statute of
           limitations). 21




and no proceeding in court without assessment for the collection of such tax shall be begun
after the expiration of such period.”); Curr-Spec Partners, L.P., 579 F.3d at 393, n.1 (“Even
though the statute of limitations runs three years after the date that the return was filed . . .
a return filed early is generally deemed filed on the date that the return was due, thereby
giving the Commissioner more than three years within which to assess tax.” (citing 26 U.S.C.
§ 6501(b)(1))).
    19 See Curr-Spec Partners, L.P., 579 F.3d at 396–97.
    20 Id. at 393.
    21 Id. at 399.

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         Under § 6229(b), the three-year statute of limitations for partnership
items can be extended by agreement. 22 Under § 6229(d), the statute of
limitations is tolled if an FPAA is mailed to the TMP. 23 If, following the FPAA,
the TMP or another partner petitions for readjustment at the partnership
level, the limitations period is suspended until one year after the conclusion of
those partnership-level proceedings. 24 Finally, “[i]n the case of a failure by a
partnership to file a return for any taxable year, any tax attributable to a
partnership item (or affected item) arising in such year may be assessed at any
time.” 25
   C. Notices of Deficiency
         In general, upon the IRS’s determination of a tax deficiency, 26 U.S.C.
§ 6212(a) requires the IRS to send the taxpayer notice of that deficiency. Such
notices allow partners to challenge the alleged deficiency in the Tax Court
before paying it. 26 However, when the tax assessment is for a “computational




   22  26 U.S.C. § 6229(b)(1) (“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 (or any other person authorized by the partnership in writing
        to enter into such an agreement),
before the expiration of such period.”).
    23 Weiner, 389 F.3d at 155; 26 U.S.C. § 6229(d) states: “If notice of a [FPAA] with respect

to any taxable year is mailed to the [TMP], the running of the period specified in subsection
(a) (as modified by other provisions of this section) shall be suspended—
        (1) for the period during which an action may be brought under section 6226 (and, if
        a petition is filed under section 6226 with respect to such administrative adjustment,
        until the decision of the court becomes final), and
        (2) for 1 year thereafter.”
    24 26 U.S.C. § 6229(d).
    25 Id. § 6229(c)(3).
    26 Woods, 134 S. Ct. at 562 (citing 26 U.S.C. § 6213(a)).

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adjustment,”—such as those that follow partnership-level adjustments 27—the
IRS is not required to issue a notice of deficiency, subject to two exceptions. 28
Relevant here, a notice of deficiency is required if a deficiency “is attributable
to [] affected items which require partner level determinations.” 29
   D. Jurisdictional Limitations
         TEFRA limits the district courts’ subject matter jurisdiction. Although
district courts generally have jurisdiction over a partner’s refund claim, 30
§ 7422(h) specifically deprives refund courts of jurisdiction over a partner’s
claim for refund attributable to a “partnership item,” with limited exceptions. 31
                                         II.    Facts
         These consolidated cases are part of a series of tax refund suits that stem
from limited partnerships managed by AMCOR. This Court has described
AMCOR partnerships before:
         These partnerships had as stated goals acquiring agricultural
         land, investing in agricultural ventures, and growing crops.
         AMCOR solicited investments from high-income professionals
         across the country. Each partner in an AMCOR partnership would
         receive a projected tax loss from crops planted in the first year of
         roughly twice that partner’s investment. Investors paid the
         farming expenses up front and deducted the amount invested on
         their tax returns. The next year, when the crops were harvested,
         the amount of loss in excess of the amount invested would be
         subject to taxes. However, the farming expenses typically exceeded
         any income realized from the farming activities. 32


   27  See Woods, 134 S. Ct. at 563 (“Once the adjustments to partnership items have become
final, the IRS may undertake further proceedings at the partner level to make any resulting
‘computational adjustments’ in the tax liability of the individual partners. § 6231(a)(6).”).
    28 26 U.S.C. § 6230(a)(1).
    29 Id. § 6230(a)(2). The other exception is not at issue. See id. § 6230(a)(2) (exception when

items “become nonpartnership items” for specified reasons.).
    30 28 U.S.C. §§ 1340, 1346(a)(1); Irvine, 729 F.3d at 460.
    31 26 U.S.C. § 7422(h); see also Irvine, 729 F.3d at 460. Taxpayers have not argued that

the two exceptions in the text of § 7422(h) are relevant here.
    32 Duffie, 600 F.3d at 367 (citation omitted); accord Irvine, 729 F.3d at 457–58.

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         Here, Taxpayers were partners in four different AMCOR partnerships.
The Steins were partners in Agri-Venture Associates (“AVA”) in 1984; the
Binghams were partners in Emperor Seedless-85 (“ES85”) in 1985; the
Hollands were partners in Canyon Desert Vineyards (“CDV”) in 1985; and the
Rodgers were partners in Agri-Venture Fund (“AVF”) in 1985 and 1986. 33 By
1987, all of the partnerships and Taxpayers had filed their tax returns for the
years at issue. Notably, however, AVA’s 1984 partnership tax return was
signed by “Joseph Voyer, Treasurer,” 34 based on which the parties dispute the
validity of the return.
         “In 1987, the IRS began an investigation and audit into the AMCOR
partnerships to determine whether they were impermissible tax shelters.” 35
The IRS asserts that in 1988, the TMPs for AVF, CDV and ES85 signed Forms
872-P, which extended the IRS’s assessment periods for each of the
partnerships until either April 30, 1991, or, if a FPAA was sent to the
partnership, “until one year after the date on which the determination of
partnership items became final.” Taxpayers disagree and assert that the
“admissible evidence disproves that ‘[i]n 1988, the [TMP] for the partnerships
including [AVF, CDV, and ES85] signed’ alleged extensions.” 36
         In April of 1991, the IRS issued FPAAs for each of the four partnerships.
Shortly thereafter, partners in each of the partnerships initiated suits in the
Tax Court which challenged the FPAAs for, among other reasons, violating the
statute of limitations. Notably, Taxpayers allege they did not participate in

   33  The Rodgers’s refund claim for 1986 is dependent on their 1985 refund claim.
   34  According to Agri-Cal Venture Associates et al. v. C.I.R., 80 T.C.M. (CCH) 295 (T.C.
2000), Joseph Voyer was not apparently a partner in the AVA partnership, and instead was
an officer of AMCOR.
    35 Duffie, 600 F.3d at 367.
    36 This Court could only locate the Form 872-P for ES85 (signed by George L. Schreiber

as TMP for ES85). Taxpayers assert that Fred Behrens, not George Schreiber, was the
statutory TMP of AVF, CDV, and ES85, and thus contend that this 872-P Form is invalid.
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these suits, arguing that the version of § 6226(d)(2) in effect at the time barred
them from doing so because their assessment periods had expired by 1990
(three years after they filed their tax returns). Taxpayers are correct that the
version of 28 U.S.C. § 6226 in effect in 1991 barred partners from being treated
as parties to another partner’s partnership suit if “the period within which any
tax attributable to such partnership items may be assessed against that
partner expired.” 37 Similarly, § 6226(d)(2) barred partners with expired tax
assessment periods from filing a readjustment petition. 38 However, the parties
dispute whether Taxpayers’ assessment periods were expired, such that the
1991 provisions barred them from joining or taking action. 39 The Tax Court
suits (that Taxpayers insist they were not parties to) were consolidated for
disposition of the statute of limitations issue. The parties filed cross-motions
for summary judgment, which the Tax Court denied in 1993, finding that there
were “genuine, and perhaps crucial, issues of material fact” to be resolved. In
1994, the original consolidation was severed, and both the partners and IRS
moved to reconsider the 1993 Order.
        Between 1997 and 1999, Taxpayers each settled with the IRS. 40 In these
settlements, which were silent as to the statute of limitations issue, Taxpayers

   37  26 U.S.C. § 6226(d)(1)(B) (1991), amended by Pub. L. 105-34, § 1239(b), 111 Stat. 1026,
1027, 1028 (1997) (amended 2015).
    38 26 U.S.C. § 6226(d)(2) (1991) (amended 2015).
    39 In 1997, § 6226(d) was amended to allow partners formerly barred from participating

in partnership-level proceedings to participate “solely for the purpose of asserting that the
period of limitations for assessing any tax attributable to partnership items has expired with
respect to such person, and the court having jurisdiction of such action shall have jurisdiction
to consider such assertion.” See 26 U.S.C. § 6226(d)(1)(B). Importantly, this amendment only
applied to partnership tax years ending after August 5, 1997. Taxpayer Relief Act of 1997,
Pub. L. 105-34, § 1238, 111 Stat. 1026 (1997). Therefore, if Taxpayers were in fact barred
from challenging the IRS’s FPAAs, they assert the 1997 amendment did not affect their
ability to participate in partnership-level proceedings for their claims from the late 1980s.
    40 Generally, when a partner settles with the IRS, “the partnership items of a partner . .

. shall become nonpartnership items.” 26 U.S.C. § 6231(b)(1)(C). However, in Weiner v. United
States, this Court determined that – for the purpose of determining if the Court had
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agreed to pay additional income tax and interest as a result of the IRS’s
adjustments to partnership items. Taxpayers paid the IRS in full, and now
seek to recover these payments in these refund suit.
       Meanwhile, on February 2, 1998, the IRS and Tax Court partners filed a
joint motion to withdraw their earlier motions for reconsideration of the 1993
Order. But between April 9, 1999 and June 29, 2000, the TMPs intervened and
ultimately agreed to try the statute of limitations issue, which developed into
Agri-Cal Venture Associates v. Commissioner of Internal Revenue (“Agri-Cal”).
Agri-Cal was the consolidated case of several partnerships, including AVF (in
which the Rodgers were partners) and AVA (in which the Steins were
partners). 41 Taxpayers argue that the IRS and the TMPs did not intend other
partnerships to be bound by Agri-Cal, 42 although there was a stipulation that
CDV (in which the Hollands were partners) and ES85 (in which the Binghams
were partners) would be so bound. On August 28, 2000, the Tax Court
concluded:
       None of the partnerships has sustained the affirmative defense of
       statute of limitations; the FPAA’s issued to AVA and TFV for the
       1984 and 1985 taxable years are valid. The FPAA’s issued to AVF,
       DV–85, and HFA–II for the 1985 taxable year are valid. 43

       The Tax Court found the assessments valid for the 1984 year because
the AVA partnership never filed a valid return (it was signed by Joseph Voyer,
not a partner), so the statute of limitations never began to run. 44 The Tax Court




jurisdiction under 7422(h) – a settlement agreement did not convert the statute of limitations
claim into a partner-level item. 389 F.3d at 159.
    41 Agri-Cal Venture Associates v. C.I.R., WL 1211147, n.1 (T.C. 2000).
    42 Taxpayers argue that the stipulations only bound the TMPs of CDV and ES85, not the

other partners.
    43 Agri-Cal Venture, 2000 WL 1211147, at *23.
    44 Id. at *8–10, *11.

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found the assessments valid for the 1985 year, because the Forms 872
sufficiently extended the three-year statute of limitations. 45
        After the Agri-Cal decision, the IRS and TMPs engaged in negotiations
in an attempt to settle all the AMCOR suits. 46 The agreements were entered
on July 19, 2001, and included the following: “That the assessment of any
deficiencies in income tax that are attributable to the adjustments to
partnership items for the years 1984 and 1985 are not barred by the provisions
of I.R.C. § 6229” (the statute of limitations extension provision).
        Around the same time as the Agri-Cal litigation and the post-Agri-Cal
negotiations, Taxpayers filed claims with the IRS in an attempt to be refunded
what they paid to the IRS after their settlements. 47 Among other arguments,
Taxpayers asserted the assessments were invalid because the IRS assessed
after the statute of limitations had run. Taxpayers did not assert, however,
that the IRS failed to issue required notices of deficiency. In 2001, the IRS
denied the refund claims of the Rodgers, Steins and Binghams, finding the
claims “precluded under I.R.C. 7422(h).” The IRS did not act on the claim filed
by the Hollands, in the form of an amended tax return. 48


   45  Id. at *15.
   46  An affidavit of Mr. Frederick Behrens states that the “IRS filed a Motion for Entry of
Decisions Pursuant to Rule 248(b) reflecting [the TMPs] understanding and intent that . . .
our ‘contingent agreement’ and the resulting agreed decisions would be binding only on those
partners ‘who meet the interest requirements of I.R.C. § 6226(d)’ and only as to partnership
items.”
    47 The Hollands attempted to file a refund claim on December 30, 1999 by submitting an

amended return signed by their attorney.
    48 The parties dispute the validity of the Hollands’ claim. The government argues that

“[t]he IRS never acted on the purported refund claim filed by the Hollands, but that is because
the Hollands never filed a valid claim.” Their amended tax return for 1985 was signed by
their attorney, not the Hollands themselves. The IRS argues that “[t]he return was thus not
valid, because an agent may sign a return on behalf of a taxpayer only in very narrow
circumstances not present here,” and because the power of attorney did not grant the
Hollands’ attorney the authority to file the return. The Hollands counter that their return
was properly filed. The dispute does not impact the outcome of this suit, since even assuming
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       Taxpayers subsequently brought a refund action in two federal district
courts, 49 the Rodgerses, Steins, and Hollands in a consolidated action in the
Southern District of Texas and the Binghams in the Eastern District of Texas.
In both cases, the parties filed cross-motions for summary judgment, and both
district courts granted summary judgment for the Government. In Bingham,
the district court held that § 7422(h) deprived it of jurisdiction, because the
Binghams’ claim that the assessments were time-barred was a claim for a
refund attributable to a partnership item under § 6229. The Rodgers court
similarly held that it lacked jurisdiction under § 7422(h) to consider plaintiffs’
§ 6229 limitations period because § 6229 is a partnership item. Both courts
relied heavily on Irvine v. United States.
       Taxpayers also argued in both district courts that the IRS was required
to issue notices of deficiency before making the assessments at issue. Both
district courts rejected this claim, albeit for different reasons. In Bingham, the
district court rejected Taxpayers’ notice of deficiency claim, finding it barred
by the “variance doctrine,” because Taxpayers failed to assert this argument
in their initial refund suit. The district court in Rodgers rejected taxpayers’
argument “on the merits” because “Section 6501(a) operates in conjunction
with Section 6229(a), and Section 6229(a) is a ‘partnership item.’” Taxpayers
appealed, and this Court entered an order consolidating the two cases.
                               III.    Standard of Review
       This Court reviews both a district court’s grant of summary judgment
and its determination of subject matter jurisdiction de novo. 50 “Summary


the Hollands properly filed their return, they face the same jurisdictional bars as the other
Taxpayers.
   49 After the suits were administratively closed without prejudice, Taxpayers in 2014

moved to consolidate the suits filed by the Rodgerses, Steins, and Hollands and to reopen
both the consolidated proceeding and Bingham. The district courts granted the motions.
   50 Irvine, 729 F.3d at 460.

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judgment is appropriate when ‘there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of law.’” 51
                                     IV.     Discussion
        At the heart of both of Taxpayers’ claims is a question of jurisdiction.
This Court has explained, “[i]n a partner-level refund action,” such as this one,
“courts do not have jurisdiction over partnership items.” 52
   A. Statute of Limitations Claim
        Because § 7422(h) deprives the courts of jurisdiction to consider a
partner’s claim for refund attributable to a partnership item, and because
Taxpayers’ statute of limitations claim is attributable to a partnership item,
the district courts lack jurisdiction to hear this claim.
        Section 7422(h) states: “No action may be brought for a refund
attributable to partnership items . . .” 53 This means “[i]f the refund is
attributable to partnership items, section 7422(h) applies and deprives the
court of jurisdiction. If . . . the refund is attributable to nonpartnership items,
then section 7422(h) is irrelevant, and the general grant of jurisdiction is
effective.” 54 The § 6229 assessment period, at issue in Taxpayers’ statute of
limitations claim, is a partnership item. 55 Section 6229 can extend § 6501’s
general three-year statute of limitations for tax assessments, “such as when




   51  Id. (quoting Fed. R. Civ. P. 56(a)).
   52  Duffie, 600 F.3d at 366 (citing 26 U.S.C. § 7422(h)) (emphasis added).
    53 The entire provision reads: “No action may be brought for a refund attributable to

partnership items (as defined in section 6231(a)(3)) except as provided in section 6228(b) or
section 6230(c).” Taxpayers have not argued that the two exceptions in the text of § 7422(h)
are relevant to this case.
    54 Irvine, 729 F.3d at 461 (quoting Alexander v. United States, 44 F.3d 328, 331 (5th Cir.

1995)).
    55 Irvine, 729 F.3d at 461 (“In Weiner, this court held that the § 6229 assessment period

is a partnership item that cannot be raised in partner-level litigation.” (citing Weiner, 389
F.3d at 157–58) (other citation omitted)).
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the TMP enters into an agreement with the IRS to extend the period,
fraudulent returns are filed, or the partnership fails to file a return.” 56
        Taxpayers advance a multitude of reasons that the IRS’s assessments of
the taxes at issue were untimely and the district courts have jurisdiction to
hear their refund claims. Taxpayers contend that they in fact prevailed on the
limitations issue in the proceedings below such that refund jurisdiction is not
barred, that the IRS failed to identify a valid partnership-level extension, that
their case is distinguishable from Irvine, and that the district courts’
interpretation of Irvine directly conflicts with our earlier decisions in Curr-
Spec Partners, L.P. v. Commissioner of Internal Revenue and Duffie v. United
States. The IRS responds that Irvine compels the outcome that the district
courts lacked subject matter jurisdiction over the limitations claim, that Irvine
is consistent with precedent and cannot be distinguished, and that Taxpayers
did not prevail on the limitations issue in the proceedings below.
        Both district courts concluded that the statute of limitations claim
cannot be determined without reference to the government’s asserted bases for
extensions under § 6229. Since § 6229 is a partnership item, they held that
§ 7422(h) deprives the courts of jurisdiction to consider Taxpayers’ limitations
claim. We agree.
        This outcome is compelled by Irvine. 57 Like Taxpayers here, the Irvine
plaintiffs “were partners in AMCOR limited partnerships in the 1980s” 58 who
asserted that they were improperly “assessed by the IRS after the 26 U.S.C.
§ 6501(a) statute of limitations had passed.” 59 They maintained “that 26 U.S.C.


   56 Irvine, 729 F.3d at 461 (internal citations omitted).
   57 729 F.3d 455.
   58 Id. at 458.
   59 Id. at 460. After FPAAs were issued in the case, other partners filed suits in the Tax

Court contesting them, “including claiming that the FPAAs were untimely.” Id. at 458. While
the Tax Court suits were pending and before the partnership-level settlements, the Irvine
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§ 7422(h) [did] not bar jurisdiction because the § 6501(a) statute of limitations
is a nonpartnership item based on the specific facts of each partner’s
situation.” 60
       The Irvine Court identified the dispositive question as “whether the
[plaintiffs’] claim that the additional tax assessments were time-barred is a
claim for a refund attributable to partnership or nonpartnership items.” 61 It
noted the “significant interplay between § 6501(a) and § 6229(a), a separate
provision that can extend the § 6501(a) period for partnership items.” 62 The
Irvine Court pointed to Weiner v. United States and Federal Circuit cases and
reaffirmed the principle “that where the government asserts § 6229 as a basis
to extend the § 6501(a) statute of limitations, the claim for refund is
‘attributable to’ a partnership item and § 7422(h) bars consideration of the
limitations claim.” 63 The Irvine Court explained that the government asserted
§ 6229 extensions based on agreement by the TMP and no valid partnership
return being filed, but that in any event a refund court may not litigate or re-
litigate the merits of extensions because they are partnership items. 64 The
Irvine plaintiffs “were required to raise the statute of limitations issue in the
partnership-level proceeding prior to settlement and [were] barred from




plaintiffs settled with the IRS. Id. After settlement, the IRS assessed additional taxes, which
each plaintiff paid before filing administrative claims for refunds in 2002 and 2003. See id.
at 458–59. Meanwhile, “the Tax Court issued a decision determining that each FPAA issued
to the partnerships was timely pursuant to 26 U.S.C. § 6229.” Id. at 458.
    60 Id. at 460.
    61 Id. at 461.
    62 Id. (citing Curr–Spec, 579 F.3d at 396).
    63 Id. at 461–62 (citations omitted).
    64 Id. at 462 (further explaining that “[w]here a § 6229 basis for an extension is asserted,

questions about whether the partnerships’ returns were fraudulent, contained substantial
omissions, were never filed, or were subject to any extension agreements are matters to be
determined at the partnership level under TEFRA’s statutory scheme.”).
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raising it in the refund action.” 65 Irvine accordingly held that “the district court
lacked jurisdiction over the statute of limitations claim under § 7422(h).” 66
        The same claims compel the same result. Here, Taxpayers maintain,
“[t]he IRS did not assess within the Taxpayers’ § 6501(a) three-year deadlines
[and] [i]t did not assess within the § 6229(a) three year periods after the
Partnerships filed their returns.” But, like in Irvine, the IRS asserted § 6229
extensions—that the AVA partnership return was invalid for not being signed
by a partner, and that the TMPs for the other partnerships agreed to
extensions. Because “the government assert[ed] § 6229 as a basis to extend the
§ 6501(a) statute of limitations, the claim for refund is ‘attributable to’ a
partnership item and § 7422(h) bars consideration of the limitations claim.” 67
        Taxpayers vigorously dispute the validity of the IRS’s asserted bases
for extension. For example, they assert that the TMP extensions were invalid
because they were not signed by the actual TMP at the time, and that
Taxpayers could not participate in the Tax Court lawsuits challenging the
FPAAs because the version of § 6226(d)(2) in effect at the time barred them
from doing so. Although Taxpayers were not directly involved in the Tax
Court suits, the government asserted § 6229 extensions to the statutes of
limitations of their partnership items. We acknowledge Taxpayers’ argument
that they were barred from participating in the partnership proceedings, 68
and that the TMP-extensions were invalid, but Irvine controls: “a refund
court litigating or re-litigating a partnership item, such as the merits of the
asserted § 6229 basis for an extension of the limitations period, is exactly the



   65 Id. (citation omitted).
   66 Id.
   67 Irvine, 729 F.3d at 461–62.
   68 Despite the Rodgers court statement that Taxpayers “were engaged with the IRS in

partnership-level proceedings to which Section 6229’s extension applied.”
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result prohibited by TEFRA.” 69 Thus, although some of the underlying
partnership-level facts are disputed, they are not material.
   B. Notice of Deficiency Claim
         Taxpayers also argue the IRS assessments are invalid because the IRS
failed     to   issue    deficiency     notices     as    required      by    § 6213(a)      and
§ 6230(a)(2)(A)(i). 70 However, this claim would require that we adjudicate
partnership items, which § 7422(h) bars us from doing. Alternatively, under
the variance doctrine, Taxpayers’ failure to raise the argument in their refund
claims before the IRS prohibits them from raising it in these refund courts.
Finally, even if we could reach the merits of Taxpayers’ argument, it would
fail.
         Section 6213(a) describes the general procedures for taxpayers who wish
to challenge a deficiency by petitioning the Tax Court. Section 6230(a) provides
that generally deficiency notices are not required for computational
adjustments, but § 6230(a)(2)(A)(i) creates an exception and requires deficiency
notices for deficiencies attributable to “affected items which require partner
level determinations.” 71 Taxpayers argue they fall within this exception,
because, first, their purported deficiencies were attributable to the violation of
their assessment deadlines, which are affected items under § 6231(a)(5). And
second, these affected items required partner-level determinations because “to


   69  Irvine, 729 F.3d at 462 (citing Weiner, 389 F.3d at 158.). Our rule of orderliness requires
we follow Irvine. See Jacobs v. Nat’l Drug Intelligence Ctr., 548 F.3d 375, 378 (5th Cir. 2008).
    70 Taxpayers claim that if they had received notices of deficiencies, they could have

challenged the deficiencies in partner-level Tax Court proceedings.
    71 Courts sometimes categorize affected items under this provision as either “substantive

affected items,” which are those that require partner-level determinations, and
“computational affected items,” which are those that do not. See Irvine, 729 F.3d at 464 (“A
computational adjustment to an individual partner’s tax liability can be made at the
conclusion of the partnership level proceeding ‘without any factual determination at the
partner level.’ A substantive affected item, however, requires ‘fact-finding particular to the
individual partner’ before any adjustment to tax liability can be made.” (citations omitted)).
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validly assess, the IRS was required to identify partner-level exceptions to
their § 6501(a) three-year assessment periods.”
         The IRS primarily takes issue with Taxpayers’ analysis because
§ 7442(h) “precludes consideration of [their] contention in these refund suits.”
As previously noted, § 7422(h) specifically deprives refund courts of
jurisdiction over a partner’s claim for refund attributable to “partnership
items.” 72 The IRS asserts that Taxpayers’ notice of deficiency theory “would
necessarily implicate the question whether the limitations period was, in fact,
extended under § 6229,” which is a partnership item. That is, Taxpayers’ first
contention that their deficiencies were attributable to violation of their
assessment deadlines “is correct if, and only if, the assessments were untimely
under § 6501(a),” which is inseparable from the § 6229 partnership-item
extension. Additionally, the IRS maintains that Taxpayers’ argument that
such affected items required partner level determinations “is correct only if the
partnership-level extensions on which the Government relies do not apply.”
The IRS alternatively argues that Taxpayers’ deficiency claim is barred by the
variance doctrine, and that even on the merits, Taxpayers’ deficiency notice
claim would fail.
         The Rodgers court found Taxpayers’ deficiency argument foreclosed by
Irvine. It explained, “[Taxpayers’] argument . . . hinges on their position that
Section 6501 is the only relevant limitations period, and that the Court should
ignore Section 6229. This argument is foreclosed by Irvine and numerous other
authority.” The Bingham court held that Taxpayers were barred from making
their notice of deficiency claim under the variance doctrine, because the
plaintiffs did not assert such an argument as a basis for refunds when they
filed their refund claims with the IRS. We agree with both district courts.

   72   26 U.S.C. § 7422(h) (with limited exceptions).
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        Taxpayers aver deficiency notices were required based on the
§ 6230(a)(2)(A)(i) exception to § 6230(a)’s general rule that deficiency notices
are not required for computational adjustments. 73 For the exception to apply,
the Taxpayers’ deficiency must be attributable to “affected items which require
partner level determinations.” 74 Taxpayers insist that their deficiency was
attributable to “the violation of their assessment deadlines,” which would fall
under § 6501(a).
        Refund courts do not have jurisdiction to adjudicate Taxpayers’
contention because it assumes that the IRS did not properly extend their
assessment deadlines under § 6229. But as previously discussed, Irvine
concluded that § 7422(h) prohibits this Court from adjudicating the merits of
§ 6229 extensions. 75 If this Court were to agree with Taxpayers that their
deficiencies were attributable to violation of § 6501(a), we would also
necessarily be finding that the § 6229 extensions did not apply—which would
be a merits determination prohibited by Irvine. Accordingly, the district courts
lack jurisdiction to consider Taxpayer’s deficiency claim.
        Furthermore, contrary to Taxpayers’ claim, Irvine does not conflict with
Curr-Spec 76 and Duffie. 77 In Curr-Spec, this Court held “that IRC § 6229(a)
does not establish an independent statute of limitations for issuing FPAAs,” 78




   73  26 U.S.C. § 6230(a)(2)(A)(i) (deficiency notice required for “any deficiency attributable
to [] affected items which require partner level determinations”).
    74 26 U.S.C. § 6230(a)(2)(A)(i). Section 6231(a)(5) defines affected item as “any item to

the extent such item is affected by a partnership item.”
    75 See Irvine, 729 F.3d at 462 (“However, a refund court litigating or re-litigating a

partnership item, such as the merits of the asserted § 6229 basis for an extension of the
limitations period, is exactly the result prohibited by TEFRA.”).
    76 579 F.3d 391 (5th Cir. 2009).
    77 600 F.3d 362 (5th Cir. 2010).
    78 Curr-Spec, 579 F.3d at 393.

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rather it may extend the general three-year statute of limitations in
§ 6501(a). 79 Irvine accepted this understanding.
        In Duffie, the parties disputed whether § 7422(h) deprived the district
court of jurisdiction to consider “Duffies’ claim that the IRS erred in assessing
§ 6621(c) interest against them.” 80 This Court reasoned, “[t]he Duffies’ refund
claim is attributable to the Tax Court’s determination that the Texas Farm
Venturers activities were sham transactions . . . Because the nature of a
partnership’s activities—whether they are sham transactions—is the
partnership-item component of an affected item, the Duffies’ refund claim is
based on the determination of a partnership item.” 81 The Duffie Court thus
held that § 7422(h) barred jurisdiction on that claim. 82 Irvine does not conflict
with Duffie, and in fact repeatedly referenced Duffie.
        Taxpayers additionally argue that Rodgers erred, because if the
§ 6501(a) statute of limitations is barred under § 6230(a)(2)(A)(i) for being
linked with § 6229, a partnership item, then § 6230(a)(2)(A)(i) would be
rendered meaningless, because “by definition, every affected item has at least
one partnership-item component.” Although there is some merit in Taxpayers’
interpretation claim, it reaches too far. Section 6230(a)(2)(A)(i) still requires
deficiency notices for non-§ 6501(a)/§ 6229 affected items which require
partner level determinations. 83 Furthermore, Taxpayers incorrectly state that
the Rodgers court held that “§ 6230(a)(2)(A)(i) does not apply when an affected

   79  Id. at 396; see id. at 401 (“The three-year statute of limitations of IRC § 6501(a) is the
period within which the Commissioner may assess taxes on an individual partner (subject to
extension) for partnership items.”).
    80 Duffie, 600 F.3d at 382.
    81 Id. at 383.
    82 See id.
    83 “For example, a taxpayer-partner’s medical expense deduction under 26 U.S.C. § 213(a)

is an ‘affected item.’ Because a taxpayer can only deduct medical expenses to the extent those
expenses exceed 7.5% of adjusted gross income, a change in the partnership’s income affects
the amount of the partner’s deduction.” Duffie, 600 F.3d at 366.
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item has a partnership-item component.” Although one could read the Rodgers
decision to suggest that § 6229(a) transforms § 6501(a) into a partnership item
for § 6230(a)(2)(A)(i) notice deficiency purposes, this was not its holding. It
found merely that in this case, contrary to Taxpayers’ arguments, § 6501 could
not be separated from § 6229 given Irvine. For the reasons already stated, we
agree.
        Additionally and alternatively, Taxpayers’ deficiency argument is
foreclosed by the variance doctrine. 26 U.S.C. § 7422(a) requires that tax
refund claims comply with “the regulations of the Secretary established in
pursuance thereof.” 26 C.F.R. § 301.6402-2(b)(1) provides:
        The claim must set forth in detail each ground upon which a credit
        or refund is claimed and facts sufficient to apprise the
        Commissioner of the exact basis thereof . . . A claim which does not
        comply with this paragraph will not be considered for any purpose
        as a claim for refund or credit.

        As this Court recently explained, “[t]his regulation codifies the variance
doctrine.” 84 This means that “[a]bsent a waiver by the Government, a taxpayer
is barred from raising in a refund suit grounds for recovery which had not
previously been set forth in its claim for a refund.” 85
        The IRS maintains that Taxpayers’ notice of deficiency claim is barred
by the variance doctrine, as they did not raise it in their administrative refund
claims. Taxpayers respond that their deficiency claim was fairly contained in



   84 El Paso CGP Co. v. United States, 748 F.3d 225, 228 (5th Cir. 2014).
   85 Mallette Bros. Const. Co. v. United States, 695 F.2d 145, 155 (5th Cir. 1983) (citations
omitted); accord Angelus Milling Co. v. C.I.R., 325 U.S. 293, 297 (1945) (“Since, however, the
tight net which the Treasury Regulations fashion is for the protection of the revenue, courts
should not unduly help disobedient refund claimants to slip through it. The showing should
be unmistakable that the Commissioner has in fact been fit to dispense with his formal
requirements and to examine the merits of the claim. It is not enough that in some
roundabout way the facts supporting the claim may have reached him.”).
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the general language of their administrative claims, citing the following
paragraph:
        The assessment of tax and interest was made after the statute of
        limitations had already expired. Any amount assessed and
        collected after the statute of limitations has expired constitutes an
        overpayment pursuant to Internal Revenue Code §6401.

        Neither this paragraph nor the rest of Taxpayers’ administrative claims
“set forth in detail” Taxpayers’ notice of deficiency ground “upon which a credit
or refund is claimed and facts sufficient to apprise the Commissioner of the
exact basis thereof.” 86 It is not enough to argue that the statute of limitations
claim “inherently include[s]” the notice of deficiency claim. Such an
understanding would defeat the purpose of “assur[ing] that the Commissioner
is apprised of the exact nature of the claim and the facts upon which the claim
is advanced so that there is an opportunity to make an administrative
determination of the claim.” 87
        Taxpayers further argue that the IRS had a duty to conduct a meaningful
investigation based on the administrative claim assertions, and had they done
so, the IRS would have ascertained that deficiency notices were required. But
this is not correct either. It is the Taxpayers’ duty to inform the IRS of grounds
for recovery in their refund claim, not the other way around. 88
        Taxpayers also contend that the IRS waived its variance argument
because it violated procedure and failed to conduct an investigation into
Taxpayers’ statute of limitations grounds in their administrative claim. As an
initial matter, “a taxpayer asserting a waiver bears an extremely heavy burden


   86  26 C.F.R. § 301.6402-2(b)(1).
   87  Mallette Bros. Const. Co., 695 F.2d at 155 (citations omitted); accord id. (“The alleged
error must be clearly and specifically set forth in the refund claim. A generalized plea of error
will not suffice.” (citations omitted)).
    88 26 C.F.R. § 301.6402-2(b)(1).

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of proving such a waiver.” 89 And in any event, the IRS addressed Taxpayers’
statute of limitations claim:
        Your claim for refund of the tax paid under the settlement
        agreement entered into with Appeals, Form 870-P(AD), concerning
        the partnership is denied. Your claim is precluded under I.R.C.
        7422(h). TEFRA requires that all challenges to adjustments of
        partnership items be made in a single, unified agency proceeding,
        at the partnership level. 90

        Though cursory, the IRS’s reliance on § 7422(h) demonstrates it rejected
Taxpayers’ statute of limitations argument based on § 7422(h)’s bar on refund
suits attributable to partnership items. Given this conclusion, the IRS had no
need to consider the merits of the claim, such as the validity of limitations
extensions. Taxpayers argue that the IRS “applied § 7422(h) only to preclude
Taxpayers from challenging the partnership-item adjustments they had
agreed to in their Forms 870-P(AD),” which they did not challenge. But
Taxpayers’ attempt to separate their statute of limitations argument from the
adjustments to partnership items is unpersuasive, given that their statute of
limitations claim requires partnership-level determinations, as previously
explained.
        Moreover, the exception to the variance doctrine “in cases where the
Government’s unilateral action itself creates the substantial variance,” does
not apply here. 91 The variance arose from Taxpayers’ failure to assert a
deficiency notice ground in its refund claim, not any later action by the IRS of




   89 Mallette Bros. Const. Co., 695 F.2d at 156.
   90 The IRS did not send a denial letter to the Hollands presumably because they submitted
their claim for refund on an amended tax return signed by their attorney. Regardless, like
the other three Taxpayers, the Hollands’ notice of deficiency claim would fail on the merits.
   91 El Paso CGP Co., 748 F.3d at 229 (citations omitted).

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which Taxpayers could not have been aware, as was the case in El Paso CGP
Co. v. United States. 92
        Finally, Taxpayers argue the IRS waived the variance doctrine
argument for failing to brief it in its motion for summary judgment. But even
if the variance doctrine was not jurisdictional and could thus be waived by a
party, 93 the IRS did not waive what Taxpayers failed to plead. 94
        In sum, because “the variance doctrine requires that the grounds for
recovery advanced in federal court must be the same as advanced before the
IRS,” 95 and because Taxpayers’ did not advance deficiency notice grounds
under § 6230(a)(2)(A)(i) before the IRS, their notice of deficiency claim is
alternatively barred by the variance doctrine.
        And even if it was not so barred, it would fail on the merits. Taxpayers’
argument that their deficiencies were attributable to a violation of their
assessment deadline misunderstands “deficiency.” Deficiency is defined at 26
U.S.C. § 6211(a):
        “the amount by which the tax imposed by subtitle A or B, or
        chapter 41, 42, 43, or 44 exceeds the excess of –

           (1) the sum of



   92  See 748 F.3d at 229.
   93  El Paso CGP Co., 748 F.3d at 228 (“To assert a court’s jurisdiction over a claim for
refund, the variance doctrine requires that the grounds for recovery advanced in federal court
must be the same as advanced before the IRS.”) (emphasis added).
    94 The Rodgers’s original complaint stated: “This is a suit arising under Sections 7422,

6401, 6402, 6230(c), 6621(c), and 6404(e) of the Internal Revenue Code . . .” The complaint’s
reference to § 6230(c) is insufficient to assert a deficiency notice claim under § 6230(a). The
Bingham’s original complaint more broadly asserted: “This is a suit arising under Sections
7422, 6401, . . . 6230, and 6621(c) of the Internal Revenue Code . . .” But even if this could be
construed as adequately pleading the deficiency notice claim under § 6230(a), the variance
doctrine argument was sufficiently before the district court. Keelan v. Majesco Software, Inc.,
407 F.3d 332, 339–40 (5th Cir. 2005).
    95 El Paso CGP Co., 748 F.3d at 227.

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              (A) the amount shown as the tax by the taxpayer upon his
              return, if a return was made by the taxpayer and an amount
              was shown as the tax by the taxpayer thereon, plus

              (B) the amounts previously assessed (or collected without
              assessment) as a deficiency, over--

          (2) the amount of rebates, as defined in subsection (b)(2), made.


        Taxpayers argue that their deficiency was $0. But this conclusion is
based on Taxpayers’ argument that the IRS’s assessment was untimely, which
this court may not consider for the reasons stated earlier in this decision, and
nevertheless contravenes the statutory definition of deficiency. Section 6211(a)
first looks to the “tax imposed by subtitle A or B, or chapter 41, 42, 43, or 44,”
not the tax a taxpayer believes should have been imposed by such subtitles or
chapters. The taxes imposed here exceeded $0. 96 Accordingly, even if the courts
could consider Taxpayers’ notice of deficiency claim, it would not be successful.


                                    V.     Conclusion
        For the reasons stated above, we affirm the decisions of the district
courts.




   96 The IRS assessed the following amounts: (1) $24,239.00 in tax and $34,016.99 in
interest against the Rodgerses for 1985; (2) $2,031.00 in tax and $3,435.61 in interest against
the Rodgerses for 1986; (3) $26,694.00 in tax and $47,245.69 in interest against the Steins
for 1984; (4) $16,206.00 in tax and $28,634.21 in interest against the Hollands for 1985; and
(5) $11,265.00 in tax and $21,676.16 in interest against the Binghams for 1985.
                                              26
