Does the Form 872 Statute Extension to Date Certain Control If Normal 3-Year from Return Date Is Later? (8/17/21)

In United States v. Davitian (D. D.C. 8/13/21), here, the Court identified but did not decide an interesting tax procedure issue.

The issue is whether, if a taxpayer provides a Form 872, Consent to Extend the Time to Assess Tax, here (authorized under § 6501(c)(4)), to a date certain and thereafter filed a delinquent return after the stated end-time in Form 872, does the § 6501(a) three-year statute after return filing apply or the statute expiration date in the Form 872.

The relevant facts highly summarized are:

• Tax year 2003.
• Taxpayer signed Form 872 extending assessment date to April 15, 2009.
• Taxpayers filed 2003 return on September 26, 2007.
• The IRS then assessed tax (presumably the tax reported on the return which would not require the notice of deficiency or SFR procedures).

The district court said (p. 5 n.1):

   n1 The court notes that Defendants have not argued that, even if they had filed a return in September 2007 as Plaintiff claims, such filing as a matter of law would not have restarted the assessment period under 26 U.S.C. § 6501(a) because Defendants previously had agreed to extend the period to a date certain and had not agreed to a further extension of time. See 26 U.S.C. § 6501(c)(4)(A) (“Where, before the expiration of the time prescribed for the assessment of any tax imposed by this title, . . . both the Secretary and the taxpayer have consented in writing to its assessment after such time, the tax may be assessed at any time prior to the expiration of the period agreed upon. The period so agreed upon may be extended by subsequent agreements in writing made before the expiration of the period previously agreed upon.”). The court takes no position on this legal question.

JAT Comments:

1. On the facts given, that is an interesting issue.  I have not researched the answer, but my speculation is that the filing statute in § 6501(a) would apply.  I think a careful parsing of the language of § 6501(c)(4) would preserve any other applicable statute of limitations.  For example, if the statute of limitations were open forever because of fraud (§ 6501(c)(1) & (2)), would the Form 872 control the latest date for assessment?  Surely not.

2.  I am not sure why the IRS would have sought and obtained a Form 872 if no return had been filed.  See § 6501(c)(3).