During an examination, assessments for the employee's share of FICA tax (IRC § 3101) can be made against either the employer or the employee.

The statute on the employee's share of FICA tax is determined by the statute date of the Form 941 filed by the employer. This is true regardless of the entity being assessed. The assessment statute date must be considered if the examiner intends to pursue the assessment against an individual employee. The statute date of the employee's share of FICA tax corresponds to the statute date of the employer's Form 941, not the employee's Form 1040 filing date.

A Form SS–10, Consent to Extend the Time to Assess Employment Taxes, is used to extend the statute on either the employer's or employee's portion of FICA tax. The Form SS–10 can be secured from the employee on the employee's portion of FICA tax. However, examiners must ensure that the expiration dates that are being monitored for protection are those of the employer's Form 941. The Form SS–10 should specifically refer to the employee's liability for the employee's share of FICA tax by adding at the top of the consent form or in the blank, fillable portion (below pargraph (3)) of the form: "This consent applies to employee's share of FICA" .

There are special instances when the mitigation provisions under IRC § 6521 would allow an offset against the employee's payment of Self-Employment Tax, but the timing of the FICA Tax assessment, in relation to the expiration of the statute on Form 941 and Form 1040, becomes critical. Examiners are advised to take a conservative approach and protect the FICA tax statute rather than rely on the mitigation provisions.

Form SS-10 is the form to use to extend the statute of limitations with respect to FICA tax on underreported tips. However, Form 872 or 872–A may be used to extend the statute for assessing additional FICA tax on tips if those forms specify that they relate to FICA tax.

If income tax and FICA tax on tips were reported on the same return, the statute for assessment of additional FICA tax is the same as the statute for the income tax.

If the FICA tax on tips was not reported on the return, there is no statute on the assessment of the FICA tax and an extension is not necessary in order to assess the FICA tax. See Rev. Rul. 79–39, 1979-1 C.B. 435

The kind of tax to specify on the consent is "FICA on tips."

The period of limitations for assessment of the Trust Fund Recovery Penalty (IRC § 6672) can be extended by consent as per IRC § 6501(c)(4). Form 2750, Waiver Extending Statutory Period for Assessment of Trust Fund Recovery Penalty, is used for this purpose.

The Trust Fund Recovery Penalty period for assessment is not protected by the Form SS–10 on the corresponding employment tax returns.

All examiners are responsible for protecting the Trust Fund Recovery Penalty statute of limitations. See IRM 5.7.3.5, Statutory Assessment Period, and 5.7.3.6, Extension of Statutory Assessment Period, for determining the period for assessment of the Trust Fund Recovery Penalty.

Form 2750 should be obtained from all persons who appear to be responsible for, but did not collect, account for, and/or pay over the taxes which are "collected" taxes. If Form 2750 cannot be secured, Form 6238, Referral Report for Potential 100 Percent Penalty Cases, should be completed by the examiner and sent to Technical Services - Advisory.

The Form 2750 should be secured when the Trust Fund Recovery Penalty statute will expire within 1 year for agreed cases or 2 years for unagreed cases, see IRM 5.7.3.4.1, Referral from Examination.

The waiver should provide for extension of the statutory assessment period to allow ample time during which issues bearing on assertion of the penalty may be resolved, so that normally it will be necessary to secure only one waiver from each responsible officer.

Care should be exercised in determining the date to which the statute should be extended. In the absence of unusual circumstances, this date should not be after December 31 of the year following the year in which the statutory period will expire (e.g., one year and 260 days after the April 15 filing date of the Form 941). See IRM 5.7.3.6.1, Form 2750 Waiver.

The consent Form 2750 will be signed by the person(s) potentially responsible if he/she agrees to extend the assessment statute.

A statute extension obtained from the transferor (the primary taxpayer) extends the transferee period for assessment. Therefore, if possible, the transferor statute should be extended.

The statutory period for assessment against a transferee can be extended by consent. The forms used for this purpose are:

Form 2045, Transferee Agreement (used in income tax situations), is an agreement between the transferee and the Commissioner in which the Commissioner agrees to discontinue action against the corporation transferor and the transferee agrees to be liable as a transferee for, and to pay, the tax liability of the transferor. The examiner should attempt to obtain this agreement, as appropriate, but it is not required in order to extend the statute. The Form 2045 does not extend the statute for assessment against the transferee or transferor.

A separate extension Form 977 and/or Form 4016 and agreement Form 2045 (in income tax situations) should be obtained from each transferee.

The transferee's statute of limitations date is one year after the expiration of the period of limitations for assessment against the transferor. See IRC § 6901(c). If the transferor's statute is extended by a consent, then the transferee's statute expires one year after the assessment can be made against the transferor under the terms of the consent.

A 6–year statute applies when gross income is understated by more than 25%. This statute can be extended by consent in the same manner as the normal 3-year statute is extended by consent.

Forms 872 and 872–A (or Forms 872–I or 872–IA) are used for income tax returns. Forms 872–P and 872–O are used for TEFRA partnership returns and Forms 872–S and 872–R are used for TEFRA S corporation returns.

No special wording is required to be added to the consent forms to extend the statute where more than 25% of gross income has been omitted from the return, whether the normal 3–year statute has expired or not. But if the normal 3–year statute has expired, the following wording can be added at the top of the consent, if desired:  "This consent is valid only if Code Section 6501(e) is applicable."

If examination issues indicate that gross income was understated by more than 25% and the 6–year statute may apply, the normal statute period should be extended, if it is still open. If the examiner lets the normal 3– year statute pass because of reliance on the more-than-25% of gross income understatement, but it is ultimately determined the understatement is 25% or less, the Service would be barred from assessing any underpayment of tax.

The statute of limitations provided in IRC § 1034(j), which establishes a special 3–year statute in the case of rollover of gain on the sale of a residence, can be extended by consent. IRC section 1034 was repealed for sales after May 6, 1997.

Form 872 or 872–A is used for this purpose.

No special wording is required to be added to the consent form to extend this statute. But the following wording can be added at the top of the extension form, if desired:  "This consent is under the provisions of Code Section 1034(j) for sale of residence."

This wording should only be added if the 3 and 6–year statutes have expired.

An extension obtained to protect the normal statute would also extend this special statute.

If a taxpayer makes an election under IRC § 183(e), the period of limitations for an assessment of any deficiency attributable to the § 183 activity for which an election was made will not expire any earlier than a special period provided in IRC § 183(e)(4). See, Form 5213, Election To Postpone Determination as To Whether the Presumption Applies That an Activity Is Engaged in for Profit.

A consent to extend the IRC § 183(e)(4) statute may be entered into after expiration of the normal three year statute period, but must be entered into before expiration of the IRC § 183(e)(4) statute. In this case, the extension would only apply to the specific activity for which the IRC § 183 election was made.

Form 872 or 872–A is used for this purpose.

No special wording is required to be added to the consent form to extend the 183(e)(4) statute. But the following wording can be added at the top of the extension form if desired:
 "This consent is under the provisions of Code § 183(e)(4)."

A qualifying corporate taxpayer or executor, administrator, or other fiduciary representing the estate of a decedent may shorten the period for assessment to 18 months after the date the request for prompt assessment is filed. See IRC § 6501(d). This shortened statute expiration date may be extended by consent, if the case cannot be closed (including administrative processing) prior to the shortened expiration date.

Form 872 or Form 872–A (or Forms 872–I or 872–IA) is used for this purpose. No special wording need be added to the consent.

If a joint return was filed by the husband and wife, the period for assessment of tax cannot be shortened under IRC § 6501(d) as to the surviving party to the joint return by the fiduciary requesting a prompt assessment as to the deceased party.

A taxpayer requesting to use the alternative method under Rev. Proc. 92-29, 1992-1 C.B. 748, with respect to a real estate project must agree to extend the period of limitation for assessment for each taxable year in which that method is used. The consent is limited to the assessment of deficiencies attributable to the use of that method with respect to the project covered by the consent.

Form 921, Consent to Extend the Time to Assess Income Tax, Form 921–A, Consent Fixing Period of Limitations On Assessment of Income and Profits Tax (S-Corporation, Partnerships, Limited Liability Company, Trusts, Syndicates, Pools, Etc.), Form 921-I, Consent Fixing Period of Limitations On Assessment of Income and Profits Tax (S Corporations, Partnerships, Limited Liability Companies, Trusts, Syndicates, Pools, Etc.) and Form 921-P, Consent Fixing Period of Limitations On Assessment of Income and Profits Tax (Partnerships and Limited Liability Companies), are used to extend the period of limitations for assessment for each taxable year in which the alternative method under Rev. Proc. 92-29, 1992-1 C.B. 748, is used.

Form 921, as revised 07/2001, provides for a period of assessment ending one year after a return is filed for the tax year in which the project is expected to be complete. The prior revision (01/2001) provided a period for assessment ending on or before a date specified in the consent.

Form 921-A is used for an S Corporation, Partnership, Limited Liability Company, Trust, Syndicate, Pool, Etc. It provides a period for assessment ending on a date specified in the consent. However, it has virtually been replaced by the two new forms: Form 921-I and Form 921-P, see below.

Form 921-I (Rev. 9/2001) is used by investors in the electing S Corporation, Partnership, Limited Liability Company, Trust, Syndicate, Pool, etc. that are not subject to unified audit and litigation procedures under TEFRA (Tax Equity & Fiscal Responsibility Act). It provides a period for assessment ending one year after the date a return is filed for the tax year in which the project is expected to be complete.

Form 921-P (Rev. 10/2001) is used by entities subject to the unified audit and litigation procedures under TEFRA . It provides a period for assessment ending one year after the date a return is filed for the tax year in which the project is expected to be complete.

For taxpayers who are in bankruptcy, consult Area Counsel or local procedures that have been approved by Area Counsel to determine who is authorized to sign the consent.

Bankruptcy does not affect the name used on the consent. Follow the same rule for a taxpayer who is not in bankruptcy.

Although tax and penalties can be assessed after the expiration of the normal period for assessment when the return is false or fraudulent with intent to evade tax, if the period for assessment is still open, it should be protected.

If the examiner allows the period for assessment to expire, in reliance on the return being false or fraudulent with the intent to evade tax, but it is ultimately determined the return is not false or fraudulent with the intent to evade tax, the Service would be barred from assessing any deficiency.

The examiner and his/her manager are responsible, in joint investigation cases, for taking any action necessary to protect the interest of the government with respect to the statutory period for assessment (the civil statute). It is not the responsibility of the criminal investigator to protect the civil statute. The referral of a case to the Criminal Investigation Division does not protect the statutory period of assessment. The assessment period continues to run during the criminal proceedings.

The taxpayer should not be requested to extend the period for assessment without first obtaining agreement from Criminal Investigation to do so. See 25.1.4.3.6, Statute Protection, for procedures to follow with regard to extending the statute or letting it expire in joint investigation cases.

In General

Association (which, in turn, is classified as a corporation)

Partnership

Disregarded entity

Form 872–T, Notice of Termination of Special Consent to Extend the Time to Assess Tax, is the written notification to the Service (or the taxpayer) that terminates the open-ended consent (Form 872–A or Form 872–IA) 90 days after issuance by the Service or 90 days after the date on which the Form 872–T is received by the office designated by the Commissioner of Internal Revenue. 

The Service or the taxpayer may terminate the Form 872–A unilaterally. Therefore, signatures of both parties are not required to terminate the Form 872–A.

.Form 872–T may be signed on behalf of the Service by any person authorized to sign consents as specified in Delegation Order 42, Revision 28, Authority to Execute Consents Fixing the Period of Limitations on Assessment or Collection Under Provisions of the 1939, 1954, and 1986 Internal Revenue Codes. See IRM 1.2.52.8, Delegations of Authority for Special Topic Activities, for the above-referenced delegation order.

The same persons authorized to sign a consent for the taxpayer can also sign the Form 872–T.

At the time the taxpayer is sent the copy of the executed Form 872–A, the taxpayer will be informed in the transmittal letter that Form 872–T should be used to terminate Form 872–A, in the event the taxpayer elects to terminate the consent. The taxpayer should also be informed that Form 872–T may be requested from the Service office considering the case.

If the taxpayer requests the Form 872–T, the Service will partially complete the form by filling in the taxpayer's name and address, identification number, type of tax, issuing office code, campus code, and in the body of the form, the date Form 872–A was executed. This information will aid in locating the return in the event Form 872–T is sent to an office other than the one considering the case.

Receipt of a properly executed Form 872–T from the taxpayer in the Service's office considering the case will start the running of the 90–day period for assessment of tax or issuance of a notice of deficiency.

If the taxpayer attempts to terminate Form 872–A other than by using Form 872–T (e.g., by letter or orally), the Service office considering the case will notify the taxpayer in writing that termination may only be made by submitting a properly executed Form 872–T. In this situation, a partially completed Form 872–T will be enclosed with a letter to the taxpayer.

Letters 1343, Transmittal Letter - Form 872-A, and 1344(DO)/1344(SC), Transmittal Letter - Form 872-T, may be used to transmit executed Form 872–A and partially completed Form 872–T to the taxpayer, respectively.

If it appears that an inadvertently completed Form 872–T is received from the taxpayer, the taxpayer should be contacted to determine if termination was intended. If the taxpayer did not intend to terminate Form 872–A, obtain a new Form 872–A from the taxpayer. After the new Form 872–A is executed, void the Form 872–T by noting thereon "Void—superseded by subsequent Form 872–A dated___. "

The Service will prepare and issue the Form 872–T for all "no change" taxable years closed to the campus. Otherwise, upon the closing of the case to the campus, the statute would remain open.

Generally, in a "no change" case, the Form 872–T should be prepared and signed at the time a case is closed at the group level. It will be mailed to the taxpayer by the case closing unit of the respective operating division or function.. When the examiner closes a " no change" case with a Form 872–A, he/she should so note on the Form 3198.

Do not issue Form 872–T for fully agreed taxable years resulting in an assessment or overassessment in which a Form 872–A was secured. In those cases, the period of limitations for assessment generally will terminate immediately after assessment of an increase in tax which reflects the final administrative appeals consideration for any such period. The provision on Form 872–A concerning the automatic termination of the period of limitation applies equally to an overassessment date of a decrease in tax for a taxable year, if such overassessment reflects the final determination of tax and the final administrative appeals consideration.