What Is Form 872 and How Should You Respond?
Understand an IRS request to extend the tax assessment statute and the key considerations for responding to a consent request with Form 872.
Form 872, “Consent to Extend the Time to Assess Income Tax,” is a legal agreement between you and the IRS. Its purpose is to provide the agency with additional time to review your tax return beyond the standard deadline. By signing, you grant this extension for a specific tax year. This is a standard procedural tool used by the IRS and is not an indication of wrongdoing.
Purpose of Extending the Assessment Period
The IRS operates under a timeline for reviewing tax returns and assessing additional tax, known as the Assessment Statute Expiration Date (ASED). The IRS has three years from the date you file your tax return, or the tax due date if filed early, to propose any changes.
During an IRS audit, some examinations are complex and require significant time to analyze. If the audit is approaching the ASED and the examiner needs more time to complete their review, they will request that you sign Form 872. Granting the extension allows the examination to continue, giving both parties time to resolve issues. This extension also benefits you by extending the time you have to file a claim for a tax credit or refund.
Key Information on Form 872
When you receive Form 872, verify that all your personal details are correct. This includes your full name, current address, and Taxpayer Identification Number (TIN), which is your Social Security Number (SSN) or Employer Identification Number (EIN).
The form will state the specific tax period or periods the extension covers and list a new, fixed expiration date. This is the date to which you are agreeing to extend the assessment period. By signing, you consent that the IRS may assess tax for the specified period on or before this new date.
You must sign and date the form to execute the agreement. If you filed a joint tax return, both spouses must sign for the consent to be valid. The form is not effective until an authorized IRS representative also signs it, and it is not an admission that you owe more tax.
Responding to the Consent Request
When presented with Form 872, you have three main choices. You can accept the agreement as is, negotiate its terms, or refuse to sign.
First, you can agree to the extension as proposed by the IRS by signing and returning the form. This allows the audit to continue, providing more time to discuss the issues and exchange information.
Second, you have the right to negotiate the terms. You can request that the extension be limited to specific, unresolved issues within your tax return. You can also propose a different, shorter extension period than the one the IRS initially suggested.
Finally, you can refuse to sign the consent. If you do not grant the extension, the IRS must act before the assessment deadline expires. The agency will likely issue a Statutory Notice of Deficiency, or a 90-day letter, detailing proposed adjustments and any additional tax owed. This determination will be based only on the information the IRS currently possesses, which may be incomplete.
An Alternative: The Open-Ended Consent
In some cases, the IRS may ask you to sign Form 872-A, “Special Consent to Extend the Time to Assess Tax.” Unlike Form 872, which sets a specific end date, this version extends the assessment period for an indefinite amount of time. This type of open-ended consent is often used in complex cases where the time needed for a resolution is uncertain.
The extension on Form 872-A remains open until either you or the IRS sends Form 872-T, “Notice of Termination of Special Consent,” to end the agreement. The extension also ends if the IRS issues a notice of deficiency.