Clarifying Misconceptions About Extending Assessment-Periods and “Cooperating” During IRS Audits


The IRS has a relatively short time to complete an audit and its resources are limited. Consequently, the IRS often must ask taxpayers to “voluntarily” extend the assessment-period by granting a Form 872 (Consent to Extend the Time to Assess Tax) or some variation thereof. Given the significant issues at stake, the Internal Revenue Code and IRS procedures mandate that IRS personnel notify taxpayers and their representatives of certain rights, including the right to reject, limit, or otherwise tailor the Form 872. A recent report by a government watchdog agency found that the IRS is not fully meeting its notification duties. Even if it were, many taxpayers and their representatives would remain completely unaware of key issues affecting the decision of whether or not to grant the IRS a Form 872.

This article explains:

  • Assessment-periods
  • IRS duties related to extension requests
  • The findings of the recent governmental report. 
More importantly, it analyzes the following critical issues related to Form 872: If a taxpayer declines to grant a Form 872 during an audit, is he permanently deprived of the chance to present his case to the Appeals Office? What strategic advantages are gained by “cooperating” with the IRS? What, exactly, does “cooperating” mean in different contexts? Is not granting a Form 872 tantamount to not “cooperating” with the IRS? 

Read the full article here.

About Hale E. Sheppard

HALE E. SHEPPARD, Esq. (B.S., M.A., J.D., LL.M., LL.M.T.) is a Shareholder in the Tax Controversy Section of Chamberlain Hrdlicka and Chair of the International Tax Group.

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