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.

Reminder on Sweep of Form 872-I, Partner Level Consent to Extend Statute of Limitations (11/23/12)

The Tax Court recently issued a decision reminding taxpayers and practitioners how sweeping the scope of the Form 872-I is.  WHO515 Investment Partners v. Commissioner, T.C. Memo. 2012-316, here.  The Form 872-I, here, is titled titled Consent to Extend the Time to Assess Tax As Well As Tax Attributable to Items of a Partnership.  The Form is executed by the partner in the partnership and thus, by extending the Section 6501, here, limitations periods with special reference to partnership adjustments, in effect, pre-empts the special minimum partnership limitation provisions in the TEFRA rules.  The Form 872-I thus specifically says:

Without otherwise limiting the applicability of this agreement, this agreement also extends the period of limitations for assessing any tax (including additions to tax and interest) attributable to any partnership items (see section 6231 (a)(3)), affected items (see section 6231 (a)(5)), computational adjustments (see section 6231(a)(6)), and partnership items converted to nonpartnership items (see section 6231 (b)). 

I have modified my Federal Tax Procedure book as follows (with the context indicating the new materials in bold):