I. Introduction
For over 20 years, the Internal Revenue Service (the “Service”) gave little importance to section 6751(b) of the Internal Revenue Code (the “Code”), which requires supervisory approval in writing prior to the assessment of certain penalties. A poorly worded statute, section 6751(b) was never clarified by regulations. Through the trilogy of Graev cases and a decision of the Second Circuit Court of Appeals in Chai v. Commissioner, the section rose from the dead, opening a Pandora’s box of taxpayers using section 6751(b) as a sword to avoid penalties on the technicality of no-written-supervisory approval. The result has been numerous cases inconsistently interpreting section 6751(b) and well-counseled taxpayers avoiding tax penalties.
Part I of this article discusses the background of the enactment of section 6751(b). The Graev and Chai decisions are examined in Part II, followed by a discussion of post-Graev cases in Part III. Part IV analyzes possible solutions to the section 6751(b) problem. The article concludes by recommending that the statute be repealed, with the impetus behind the enactment of the statute addressed through the Service’s internal procedures.
II. Statutory Background
As part of the Internal Revenue Service Restructuring and Reform Act of 1998 (the “Act”), Congress enacted section 6751. Section 6751(a) mandates the Service include with each penalty notice “information with respect to the name of the penalty, the section of this title under which the penalty is imposed, and a computation of the penalty.” Prior to enactment, the law did not require the Service to describe how penalties were computed, and Congress believed “that taxpayers are entitled to an explanation of the penalties imposed upon them.”
Section 6751(b)(1) requires written supervisory approval prior to the assessment of certain penalties:
No penalty under this title shall be assessed unless the initial determination of such assessment is personally approved (in writing) by the immediate supervisor of the individual making such determination or such higher level official as the Secretary may designate.
Section 6751(b)(2)(A) carves out certain penalties from this approval requirement: section 6651 for a failure to file a return, section 6654 for an individual’s failure to pay estimated taxes, section 6655 for a corporation’s failure to pay estimated taxes, and section 6662(b)(9) for overstated section 170(p) cash charitable contributions. Supervisory approval is also not required for “any other penalty automatically calculated through electronic means.” A “penalty,” for purposes of this section, “includes any addition to tax or any additional amount.” A companion provision enacted by the Act, section 7491(c), sets the burden of production “in any court proceedings” on the Service for the liability of an individual “for any penalty, addition to tax, or additional amount imposed by this title.”
The Act was enacted to modernize and improve the Service’s efficiency and taxpayer services, implementing recommendations of the National Commission on Restructuring the Internal Revenue Service (the “Commission”) embodied in a 1997 report (the “Commission Report”). The Commission’s goal was “to restore the public trust in the IRS” and “recommend how the IRS might better serve the American taxpayer and the federal government in the twenty-first Century.” As one part of its mission, the Commission Report identified the need to ensure “that taxpayers are treated fairly and impartially by the IRS, are able to seek redress or review of IRS actions by the courts, and are able to resolve conflicts creatively and expeditiously with IRS cooperation.” The Commission recognized improvement in the Service’s culture since enactment of the Omnibus Taxpayer Bill of Rights and the Taxpayer Bill of Rights 2 in 1988 and 1996, respectively. Even though the Commission “found very few examples of IRS personnel abusing power,” it nevertheless projected that “there likely will continue to be the few unfortunate examples of abuse.” The Commission further found that examinations and collection actions could be “intrusive, burdensome, and lengthy” despite Service employees “generally striv[ing] to do a good job,” laying the blame on “weak performance measurements, insufficient training, and a lack of proper managerial review and control.”
The legislative history of section 6751(b), a minor part of the Act’s efforts to “restore public trust in the IRS,” provides little information as to the motivation for including it in the Act’s revamping of the Service. The report of the Senate’s Committee on Finance states that supervisory approval should be required because “the Committee believes that penalties should only be imposed where appropriate and not as a bargaining chip.” Further, the provision “requires the specific approval of IRS management to assess all non-computer generated penalties unless excepted.” In Senate hearings on the Act, Michael I. Saltzman stated that the substantial understatement penalty of section 6662(a) “can easily be abused by IRS agents and be frustrating to taxpayers.” And, “many practitioners also believe that the penalty is asserted at the district level solely to gain some bargaining advantage at the Appeals level.” Stefan F. Tucker testified that penalties are an “IRS negotiating tool”: “If you don’t settle, we are going to assert the penalties.”
Additional insights as to the impetus behind including section 6751(b) in the Act can be gleaned from the report of the Joint Committee on Taxation that was mandated by the Act. “The Joint Committee on Taxation and the Secretary of the Treasury were each directed to conduct a study (1) reviewing the administration and implementation by the IRS of the penalty and interest provisions of the Code and (2) making any legislative or administrative recommendations the Joint Committee or the Secretary deems appropriate to simplify penalty or interest administration and to reduce taxpayer burden.” The Joint Committee prepared a comprehensive, two-volume report and made extensive recommendations (“JCT Report”). The report of the Department of the Treasury offers no particular insights to the section 6751(b) supervisory approval requirement.
One recommendation in the JCT Report was for the Service to “improve the supervisory review of the imposition of penalties” to make penalty administration more uniform and “reflect individual circumstances without unduly hindering the rapid resolution of disputes.” These improvements “could improve the fairness of the penalty system” and reduce the perception “that penalties are on occasion asserted as a way of improving the IRS’s bargaining position with the taxpayer, rather than strictly because the taxpayer’s behavior justified the penalty.” The report, however, noted the difficulty of reducing this perception, because “the imposition of a penalty in many instances requires the exercising of sound judgment regarding complicated facts and motivations concerning which there may be disputes.” The report cautioned that legislative changes “should not be undertaken without careful and deliberative review by the Congress and the opportunity for public input,” as well as “careful consideration ¼ given to the views of the Administration, and particularly the IRS.”
The legislative history of section 7491(c) also sheds some light on the penalty approval requirement by its initial allocation of the burden of production in penalty cases to the Service:
[I]n any court proceeding, the Secretary must initially come forward with evidence that it is appropriate to apply a particular penalty to the taxpayer before the court can impose the penalty. This provision is not intended to require the Secretary to introduce evidence of elements such as reasonable cause or substantial authority. Rather, the Secretary must come forward initially with evidence regarding the appropriateness of applying a particular penalty to the taxpayer; if the taxpayer believes that, because of reasonable cause, substantial authority, or a similar provision, it is inappropriate to impose the penalty, it is the taxpayer’s responsibility (and not the Secretary’s obligation) to raise those issues.
Although sections 6751(b) and 7491(c) were just two of the many provisions enacted by the Act, they fall neatly within one of the Act’s themes of the Service treating taxpayers fairly and impartially. This theme is further reflected in an uncodified provision of the Act that requires the discharge of any Service employee who has done any of 10 specified acts as part of the employee’s official duties; these acts are commonly referred to as the “10 Deadly Sins.” Among the sins are the falsification or destruction of documents to conceal the employee’s mistakes and violating a provision of the Code, Treasury Regulations, or a Service policy to retaliate against or harass a taxpayer, the taxpayer’s representative, or another Service employee. The Act also required the Service to prioritize employee training by implementing an employee training program.
III. The Graev and Chai Cases
Section 6751(b) was an uncontroversial provision for over 20 years. The Graev trilogy of cases, however, opened a Pandora’s box of litigation and uncertainty as to the meaning and reach of the statute. Graev began with a Tax Court decision in 2013 (“Graev I”), in which the court upheld the Service’s disallowance of charitable contribution deductions for cash and the noncash contribution of a façade easement made by Lawrence and Loran Graev to the National Architectural Trust. The Service had imposed accuracy-related penalties under section 6662, which were the subject of subsequent proceedings in Graev II.
In Graev II, the revenue agent (“RA”) determined that the Graevs were liable for the 40% gross-valuation-misstatement penalty of section 6662(h) for noncash contributions. The penalty was approved in writing by the RA’s immediate supervisor, and the RA prepared a notice of deficiency (“NOD”) reflecting the penalty. A Chief Counsel attorney reviewed the NOD and advised by memorandum, approved in writing by the attorney’s supervisor, that the NOD should include an alternative 20% penalty under section 6662(a) for noncash contributions. The NOD was issued with both sections 6662(a) and 6662(h) penalties for the noncash contributions but without the written approval of the 20% penalty by the RA’s supervisor. The taxpayers filed a Tax Court petition and moved for partial summary judgment, raising the issue of section 6751(b) non-compliance. The Service then filed an amended answer, affirmatively alleging liability for the section 6662(a) penalty for cash contributions. The taxpayers argued that the “initial determination” was to impose the 40% penalty and that the 20% penalty was neither “determined” by the RA nor approved by his immediate supervisor.
The court sustained the imposition of the section 6662(a) penalty, rejecting the taxpayer’s claim that the Service had not complied with section 6751(b). The court addressed the timing requirement for section 6751(b) approval and found the challenge under section 6751(b) to be “premature.” The Service had not yet assessed the section 6662(a) penalty, and section 6751(b) “imposes no particular deadline for the IRS to secure the required written approval before a penalty is assessed.” Section 6203 provides that an assessment is made “by recording the liability of the taxpayer in the office of the Secretary in accordance with rules or regulations prescribed by the Secretary.” The section 6662(a) penalty cannot occur until the court’s decision is final and unappealable, and therefore the section 6751(b) issue was “not ripe for review.”
The position of the Service and the Tax Court in Graev II reflected the state of the law in 2016 with respect to section 6751(b), which had been uniformly applied since 1998: Written supervisory approval could be obtained any time prior to assessment. Before the Graev II decision, few cases had interpreted the section. In fact, the Tax Court had issued just one regular decision and three memorandum decisions prior to Graev II. In Legg v. Commissioner, the Tax Court addressed the “timing aspects” of section 6751(b), holding that the initial determination was the Service’s examination report. Tax Court memorandum decisions held that a section 6652(c) delinquency penalty for an exempt organization’s failure to file a return and the section 6702 frivolous return penalties were within the electronic-means exception. The other memorandum decision granted summary judgment after verifying that the Service had validly assessed section 6702 penalties.
Although the Graev II decision reflected the then-accepted interpretation of section 6751(b), the views of the Tax Court judges were split: nine judges supported the majority opinion, three judges concurred, and five judges adopted the dissenting opinion. The dissent disagreed with the majority’s view that section 6751(b) could not then be considered at the Tax Court level and opined that the supervisory approval requirement had not been met for the section 6662(a) penalty. Regarding whether consideration of the issue was premature, the dissent stated that section 6751(b) does not “preclude pre-assessment consideration of compliance with that rule.” Section 7491(c) assigns the burden of production to the Service “in any court proceeding” with respect to penalties, and therefore “compliance with section 6751(b) is properly a part of the burden-of-production inquiry in our deficiency cases involving penalties.” If a Service agent “cynically raises an unwarranted penalty as a bargaining chip” and includes it in a NOD without supervisory approval, under the majority view, the Service could not “come forward with evidence that it is appropriate to apply a particular penalty to the taxpayer” as required by section 7491(c). Further, supervisory approval must be obtained at a time when the supervisor has that authority. Because the Code requires that a deficiency determined by the Tax Court be assessed when the court’s decision is final, approval must be obtained before such time or it would “thereafter be meaningless.” The dissent recognized that the phrase in the statute—”initial determination of such assessment”—is ambiguous, because an “assessment” is not “determined” and instead is only an administrative act to formally record a tax liability. The dissent found this meaning to be “unworkable” in the context of section 6751(b): “One can determine whether to make an assessment, but one cannot ‘determine’ an ‘assessment.’”
After the Graev II opinion was issued, the Second Circuit Court of Appeals reversed the Tax Court memorandum decision in Chai v. Commissioner. Jason Chai had underreported his income in 2003 due to a $2 million payment received in connection with a tax shelter scheme on which he failed to pay self-employment tax. In a post-trial brief, Mr. Chai challenged the Service’s deficiency and the imposition of a section 6662(a) penalty, alleging the Service did not meet its burden of production under section 7491(c), because it did not provide evidence of compliance with section 6751(b). The Tax Court considered this argument untimely since the taxpayer had not previously raised the issue. The court thus did not “rule on the issue of whether the section 6751(b) requirement is part of respondent’s burden of production and express[ed] no opinion as to the merits of petitioner’s argument.”
Mr. Chai appealed, and the Second Circuit reversed the Tax Court’s decision and upheld imposition of the penalty. Instead of arguing that the section 6751(b) claim was untimely as it did at the Tax Court level, the Service asked the court to follow Graev II’s holding that it was premature to consider the issue. The court considered the Graev II majority and dissenting opinions and adopted the dissent’s analysis, disagreeing with the majority that the statute was clear and finding that the meaning of “an initial determination of [an] assessment” is ambiguous. Because of the ambiguity, the Court of Appeals looked to legislative history to determine the purpose of section 6751(b), which was to “prevent IRS agents from threatening unjustified penalties to encourage taxpayers to settle.” Allowing a penalty to be unapproved until just before assessment “would do nothing to stem the abuses § 6751(b)(1) was meant to prevent.” The court examined at what point supervisory approval had to be given and decided such time was before a Tax Court proceeding was initiated. Based on the “truly consequential moment” for approval, the court held that the written approval of “the initial penalty determination” had to be obtained no later than the date the NOD is issued, or the filing of an answer or amended answer asserting penalties. The court further held that compliance with section 6751(b) is part of the Service’s burden of production and proof in a deficiency case, although the statute only states the Service has the burden of production.
As a result of the Chai decision, the Tax Court reversed in part Graev II, which was appealable to the Second Circuit Court of Appeals. The court issued a supplemental opinion written by Judge Thornton in Graev III, adopting the holding in Chai. Because the section 6751(b) issue was no longer premature, and, in the “interest of repose and uniformity that touches many cases,” the court considered the merits of taxpayers’ section 6751(b) argument. The court then held that compliance with section 6751(b) was “properly a part of respondent’s burden of production” under section 7491(c). With the Service having conceded the section 6662(h) penalty, the court examined whether the Chief Counsel attorney’s recommendation of section 6662(a) penalties for noncash contributions was an initial determination to assess the penalty. The court found compliance with the approval requirement, because the attorney recommending the penalty was the “first person to recommend” the penalty, and this determination was approved by the attorney’s immediate supervisor in writing. In addition, the amended answer to taxpayer’s Tax Court petition filed by the Service counsel alleging section 6662(a) penalties for cash contributions was also approved by counsel’s supervisor and met the requirements of section 6751(b). The court thus set the rule that the initial determination refers to “the action of the IRS official who first proposes that a penalty be asserted.”
Judge Buch, joined by five other judges, concurred with the majority opinion in following Chai but dissented regarding the holding that a recommendation of a Chief Counsel attorney can constitute an “initial determination.” Eight judges concurred with the opinion of Judge Thornton. Judge Holmes concurred with the result but disagreed with extending Chai to other circuits. He advised that adopting Chai would have “unintended and irrational consequences” and “even end up harming taxpayers unintentionally.” Disagreeing with Chai’s extension of the burden of production to the burden of proof, Judge Holmes cautioned that this could “have a more powerful effect on penalty cases than anyone realizes.” He criticized Chai’s rewriting the text of the Code, warning this could become “[l]ike some ghoul in a late-night horror movie that repeatedly sits up in its grave and shuffles abroad.” Graev III overruled Graev II “in the interest of repose,” yet Judge Holmes determined “there will be no repose,” because of the “confusion caused by this reconstruction.” He predicted the Pandora’s box that would follow, noting that some taxpayers who should be penalized would be let off “their well-deserved hook,” while others would be penalized in marginal cases.
IV. Post-Graev Cases
As Judge Holmes predicted, the Graev III case opened the floodgates of section 6751(b) litigation. During the period 2017 (post-Graev III) through the end of 2021, there have been 23 regular Tax Court decisions and over 200 Tax Court memorandum decisions addressing section 6751(b). Claiming noncompliance with section 6751(b) has become standard operating procedure for petitioning taxpayers. Taxpayers have even raised the issue where approval had been obtained at every stage of the proceeding—examination, appeals, and litigation. Taxpayers saw an opening to avoid penalties on the technicality of lack of written supervisory approval, arguing variously that approval was required for specific types of penalties, approval procedures were not followed, approval was not of the initial determination of an assessment, or the Service did not meet its burden of production.
A. Specific Penalties
The statute excludes from the supervisory approval requirement the penalties of section 6651 for failure to file a return, section 6654 and section 6655 for failure to pay estimated taxes, and section 6662(b)(9) for an overstated cash charitable contribution under section 170(p). Post-Graev, taxpayers challenged the lack of supervisory approval of penalties in other Code sections not within the statutory carve-outs. Courts held that the section 6751(b) requirement applies to the section 6663 civil fraud penalty, the section 6672 trust fund recovery penalty, section 6701 penalty for aiding and abetting an understatement of tax, section 6702 frivolous return penalty, and the section 6707A penalty for failure to disclose a reportable transaction. The requirement does not, however, apply to the section 72(t) exaction of 10% on early distributions from retirement plans, which was determined to be a tax and not a penalty. There is also no approval requirement for the penalty under section 6673 for frivolous claims, because the penalty is imposed by the Tax Court, and not by the Service, for misbehavior before the court.
Section 6751(b) additionally excepts from the supervisory approval requirement “any other penalty automatically calculated through electronic means.” A post-Graev case determined that the section 6699 penalty for failure to file an S corporation return was within this exception, even though a reasonable-cause defense is available. The Service had recognized pre-Graev that the section 6702 frivolous return penalty is within the electronic-means exception if the penalty is calculated automatically under the Electronic Fraud Detection System (“EFDS”) but not if the Service employee makes an “independent determination that the penalty should apply.” Post-Graev, the Service continued this interpretation, advising that penalties computed under the Automated Underreporter (“AUR”) or Combined Annual Wage Reporting Automated programs were within the electronic-means exception but only if the taxpayer did not submit a response to the Service’s notification of the penalty. The Tax Court extended this distinction to the section 6662(d) substantial understatement penalty imposed automatically by the Automated Correspondence Exam (“ACE”) software. In sum, if the penalty is determined by a Service computer without any involvement of the Service examiner, it is not subject to supervisory approval.
B. Approval Procedures
Taxpayers challenged the Service procedures used to obtain supervisory approval, often unsuccessfully. The Tax Court rejected taxpayers’ argument that they had to be allowed time to present a reasonable-cause defense prior to supervisory approval, noting that section 6751(b) requires no particular procedure for penalty approval. Taxpayer’s argument that proof of approval could only be obtained through cross-examination of the RA and his supervisor was likewise rebuffed. Similarly, although a supervisor must review the penalty approval form, there is no requirement that her “thought process” be analyzed or that her review was “meaningful.” Consideration of the merits of the penalty determination is not required. The Tax Court made its position clear: “The written supervisory approval requirement of section 6751(b)(1) requires just that: written supervisory approval.”
Although written approval is required, an actual signature of the supervisor is not. An electronic signature is sufficient, and approval may be shown by e-mail. The Tax Court did find that the approval requirement was not met where the date of approval was not included on the penalty approval form, where the reason for the penalty in the approval form was not the same as that stated in the NOD, and where the approval form did not show that the approver was the immediate supervisor. Further, a general statement that penalties are approved, without specifying the specific penalty, is not sufficient.
Section 6751(b) requires that the taxpayer’s “immediate supervisor” approve the penalty. In a challenge as to whether the proper person approved the penalty, the Tax Court determined that such supervisor “is most logically viewed as the person who supervises the agent’s substantive work on an examination, even if the examiner’s direct supervisor is someone else.” When there is an acting supervisor, the Service considers that person to be the immediate supervisor if she has an approved Designation to Act or a Notification of Personnel Action on file.
For court proceedings, a taxpayer cannot raise the section 6751(b) issue for the first time on appeal when the issue could have been raised in the Tax Court. Further, a claim of noncompliance cannot be raised at the district court level if it was not raised in administrative proceedings. If a taxpayer, instead of disputing this issue in court, enters into a closing agreement with the Service, he waives the section 6751(b) requirement.
C. Initial Determination
Although Chai held that supervisory approval must be obtained by the time of the issuance of the NOD, taxpayers attempted to push this moment back to a point when there had been no supervisory approval. Graev III examined the timeline more closely, concluding that the initial determination is the time of the action of the first Service official to propose a penalty. In a post-Graev case, Clay v. Commissioner, the Tax Court held the initial determination occurs at the time of the Service’s first “formal communication” to the taxpayer advising that penalties will be imposed and the taxpayer has the right to request an Appeals conference. In Clay, the first formal communication, and thus the initial determination, was the 30-day letter and Form 4549, Income Tax Examination Changes, commonly referred to as a Revenue Agent Report (“RAR”), proposing penalties. The Tax Court moved the date back even earlier in Carter v. Commissioner, where a Letter 5153 (Examination Report Transmittal – Statute less than 240 Days) sent with the RAR was held to be the initial determination, because the letter “clearly reflected” the examiner’s conclusion as to the imposition of penalties. In Kroner v. Commissioner, a different report transmittal, Letter 915 (Examination Report Transmittal), accompanied by the RAR, was held to be the initial determination, because it notified the taxpayer that penalties were being proposed and the taxpayer had the right to appeal. Although penalty approval had been obtained prior to sending the 30-day letter and RAR, the court held that the Letter 915 was the initial determination; “the content of a document and not its label is controlling.” The Eleventh Circuit Court of Appeals reversed both the Carter and Kroner decisions, holding that the statute requires approval only before the assessment of penalties and not before an RA’s first communication with the taxpayer about penalties.
The RAR can be delivered in person at a closing conference and constitute an initial determination; there is no requirement that it be sent by mail. However, a telephone call between the Service and the taxpayer, where the Service mentioned the possibility of penalties but had not reached an unequivocal decision, was not an initial determination. The taxpayer also did not succeed in the distressed asset trust transaction in Thompson v. Commissioner, where the examiner sent several letters containing a settlement offer with reduced penalty amounts, because the correspondence did not indicate that the Service had completed its work and made an unequivocal decision to assert penalties. Similarly, Service Letter 3176C sent to a taxpayer warning that his position was frivolous under section 6702 was held not to be an initial determination, because it was a “contingent” communication and not an “unequivocal” communication. A taxpayer even went so far as to claim the Service’s public notice advising the penalty risk to participants in syndicated easement transactions was an initial determination. The court held that a public notice was not an initial determination, because it did not constitute the “first communication to the taxpayer.”
The Tax Court followed Clay in Laidlaw’s Harley Davidson Sales, Inc. v. Commissioner, holding that the first formal communication to the taxpayer in which penalties were proposed (i.e., the 30-day letter) was an initial determination in a non-deficiency case for a penalty under section 6707A for failure to report a reportable transaction. The RA’s supervisor had approved the penalty before a requested Appeals conference but after sending the 30-day letter, thus failing to timely obtain approval. On appeal, the Ninth Circuit reversed the Tax Court decision and put some limitation on the expansive interpretations of the Tax Court. The court held that section 6751(b) requires supervisory approval at the earlier of the assessment of the penalty or before the supervisor “loses discretion whether to approve the penalty assessment.” Because section 6707A is not subject to deficiency rules, the supervisor had such discretion at the time he approved the penalty. Commenting on the lower court decision, the court said: “The problem with Taxpayer’s and the Tax Court’s interpretation is that it has no basis in the text of the statute. … The statute does not make any reference to the communication of a proposed penalty to the taxpayer, much less a ‘formal’ communication.”
The Tax Court addressed when an initial determination occurs for TEFRA partnerships. In a 2018 memorandum decision, the court held that supervisory approval must be obtained prior to issuance of a Final Partnership Audit Adjustment (“FPAA”); amending an answer and reasserting the penalties after approval is not sufficient. In a 2020 regular Tax Court case, Belair Woods, LLC v. Commissioner, the Service sent the taxpayer Letter 1807 and the Summary Report, setting out tentative proposed adjustments and penalties and inviting taxpayer to a closing conference. After the conference, the Service issued a 60-day letter, which formally stated the Service’s decision to assert penalties and offer the taxpayer the opportunity to appeal. The penalties had not been approved by the time Letter 1807 was sent to the taxpayer, but they had been approved by the time of the 60-day letter. The taxpayer’s appeal was unsuccessful, at which point the Service issued a FPAA. The court determined the 60-day letter, and not the Letter 1807, was the initial determination. “The statute requires approval for the initial determination of a penalty assessment, not for a tentative proposal or hypothesis”; a “mere suggestion or indication of a possibility” is not a “determination.”
Following the same logic, the Tax Court held in another TEFRA case, Tribune Media Co. v. Commissioner, that Form 5071, Notice of Proposed Adjustment (NOPA), was not an initial determination. The NOPA contained no notification of the opportunity to administratively appeal and conveyed no “sense of finality.” Instead, the NOD, along with the FPAA, was the first formal communication that the Service had determined to assert penalties and thus was the initial determination. If a partner brings a partner-level proceeding following the partnership-level proceeding, proof of supervisory approval is not again required. The issue must, however, have been raised during the partnership-level proceedings; it is not a partner-level defense.
