What to Do When You Receive IRS Form 443-D

IRS Form 872-M, Consent to Extend the Time to Make Partnership Adjustments, is a specific document used during a partnership audit. The IRS sends this consent form when it needs more time to assess any potential tax adjustments that may arise from its examination. The form is a formal agreement between the partnership and the IRS to extend the assessment deadline. This request is a normal part of the audit process for complex cases.

Purpose of Extending the Assessment Period

The IRS operates under a legal deadline for assessing taxes, known as the statute of limitations. For partnership audits conducted under the Bipartisan Budget Act of 2015 (BBA), the IRS has three years from the date the partnership return was filed or its due date, whichever is later, to make an assessment. When an audit is complex or requires substantial information, the IRS may be unable to complete all procedures within this timeframe.

Requesting an extension provides the IRS examination team with adequate time to review the partnership’s records without the pressure of an expiring deadline. This can be beneficial, as it allows the partnership more time to provide documentation and for the IRS to conduct a full analysis. This process can help resolve issues at the examination level rather than through more formal and costly dispute channels.

Understanding the Consent Form

When a partnership receives Form 872-M, it will identify the partnership by name and taxpayer identification number (TIN). It also specifies the tax year or years under examination and the new proposed expiration date for the statute of limitations.

Under the BBA centralized audit regime, the Partnership Representative (PR) has the sole authority to bind the partnership in an IRS audit. The PR is designated on the partnership’s tax return for the year under review. This individual is the only one who can sign Form 872-M on behalf of the partnership and all its partners.

Before any action is taken, the PR should carefully review the form to ensure all information is accurate. The PR’s signature creates a binding agreement with the IRS that alters a fundamental legal deadline. The decision to sign rests entirely with the PR, who is expected to act in the best interest of the partnership.

Responding to the IRS Request

To agree to the extension, the Partnership Representative must sign and date Form 872-M. The signature and title must match the information the IRS has on file for the designated PR for that tax year. Any discrepancy could lead to the rejection of the consent form and create procedural complications.

The signed form must be returned to the IRS according to the provided instructions, which will include the mailing address or secure fax number of the managing IRS agent. An extension is only valid if it is executed by both the PR and the IRS before the original assessment period closes.

Upon receiving the signed consent, the IRS will countersign it, making the extension official. The partnership will receive a copy of the fully executed form for its records. This document serves as proof of the new assessment deadline.

Implications of Not Signing

If the Partnership Representative decides not to sign and return Form 872-M, the IRS cannot force an extension. In this situation, the agency must conclude its audit and assess any tax it believes is due before the legal deadline passes. This constraint forces the agency to act on the information it has gathered up to that point.

The IRS will likely issue a Notice of Proposed Partnership Adjustment (NOPPA). A NOPPA is a formal document that details the IRS’s proposed adjustments to the partnership’s return, the resulting imputed underpayment amount, and any applicable penalties. It is the official start of the process to resolve the audit and assess the tax.

Receiving a NOPPA moves the audit to a more formal dispute resolution track where the PR can challenge the adjustments. However, the adjustments proposed in the NOPPA may be based on incomplete information if the partnership did not have sufficient time to provide all relevant records, potentially resulting in a less favorable outcome.