What Is IRS Form 872 and Should You Sign It?

IRS Form 872, Consent to Extend the Time to Assess Tax, is a formal agreement between a taxpayer and the Internal Revenue Service (IRS) that extends the legal deadline for the agency to review a tax return and assess additional taxes. Signing this form gives the IRS more time to conduct its examination of your tax filings. The form is not an admission of tax liability but is a procedural tool used during an audit.

The Statute of Limitations on Assessment

The IRS operates under a timeline for assessing taxes. According to Internal Revenue Code Section 6501, the agency has three years from the date you file your tax return, or its due date, whichever is later, to assess any additional tax. This three-year period is the assessment statute of limitations. Once this period expires, the IRS is barred from assessing more tax for that year.

The IRS may request that you sign Form 872 to extend this deadline if it needs more time to complete an audit. This occurs in complex examinations where extensive information is required. An extension allows the audit process to continue without the pressure of the expiring statute, providing both you and the IRS examiner more time to resolve the issues. Without this extension, the IRS would be forced to make a determination based on the information it already has.

Information Required for Form 872

To properly complete Form 872, you must provide several specific pieces of information on the document, including:

• Your name, address, and taxpayer identification number (Social Security Number or Employer Identification Number)
• The names and SSNs for both spouses if you filed a joint return
• The kind of tax for which the extension is being granted, such as income or employment tax
• The specific tax periods covered by the agreement, entered as the year ending on December 31
• The new expiration date for the assessment period, which is a negotiable date that establishes the new deadline for the IRS

Executing and Submitting the Form

Form 872 must be signed by the appropriate party. For an individual return, the taxpayer signs the form, and for a joint return, both spouses must sign to ensure the agreement is valid. A corporate officer authorized to act on the company’s behalf must sign for a corporation.

After signing, send the form back to the IRS office or agent who requested it. An authorized IRS representative will then countersign the form. You should receive a copy of the fully executed document for your records, confirming the extension is in effect.

Strategic Considerations Before Signing

Deciding whether to sign Form 872 requires considering the potential outcomes. Signing the form allows the audit to proceed, giving you additional time to gather and present documents that support your tax position. This can facilitate a more thorough resolution with the examining agent and keeps the lines of communication open for continued negotiation.

Refusing to sign Form 872 will compel the IRS to act before the statute of limitations expires. The agency will issue a Statutory Notice of Deficiency, also known as a 90-day letter, based on the information it possesses. This notice details the proposed tax deficiency, and you have 90 days to either agree to the assessment or file a petition with the U.S. Tax Court to dispute it.

A taxpayer has the option to negotiate a “restricted consent.” This is a modification to Form 872 that limits the extension to one or more specific issues on the tax return. This prevents the IRS from using the extended period to examine other, unrelated items on your return. The IRS must inform you of your right to request this limitation, but agreeing to it is at the agency’s discretion.