Publication 1035

                             Extending the 

                             Tax Assessment 

                             Period

Background
The Internal Revenue Service (Service) makes every          Congress, recognizing that additional time may 
effort to examine tax returns as soon as possible after     sometimes be needed to fairly resolve a tax 
they are filed. To ensure timely tax examinations,          examination, has provided for extending the statutory 
Congress has set deadlines for assessing taxes and          period by written agreement between you and the 
making refunds or credit of tax. These deadlines            Service. These agreements are called “consents” 
are called “statutes of limitations.” Without statutes      and generally    apply to all taxes except estate tax. To    
of limitations, a tax return could be examined and          provide consistency, the Service has developed forms          
tax assessed, refunded, or credited at any time,            for the written consents. The signed consent form is        
regardless of when the return was filed.                    considered to be binding on you and the Service.
Assessment statutes of limitations generally limit          There are two basic kinds of consents: the fixed-
the time the Service has to make tax assessments            date consent     and the open-ended consent. The 
to within three years after a return is due or filed,       fixed-date consent   sets a specific expiration date for 
whichever is later. The Service cannot assess               the extension of the statute, while the open-ended 
additional tax after the time for assessment has            consent extends the statute for an indefinite length of 
expired under any statute of limitations (even if the       time.
Service discussed the need for a tax adjustment with 
you before the expiration). Statutes of limitations         Length of Extension
also limit the time you have to file a claim for credit 
or refund. The Service is legally prohibited from           The Service’s examiners will request an extension         
making a   refund or credit for your claim if you file it   period no longer than is necessary to complete the         
after the time  for filing has expired under the statute    examination and any administrative action necessary 
of limitations. Also, if you disagree with the return       to process your case. As stated above, the Service 
examination    findings, we cannot provide you with         uses two kinds of consents to accomplish this, a      
an administrative appeal     within the Service unless      “fixed-date” and an “open-ended” consent.
sufficient time remains on the statute of limitations.      Fixed-date consents expire on the date specified in 
Because of these     restrictions, the Service identifies   the consent. Once the original date under the statute 
tax returns under examination       for which the statutory of limitations is extended by a signed consent, it may 
period for assessment    is about to expire and             be further extended by the mutual agreement of the          
requests that you    extend the assessment statute of       parties before the expiration date of the previous    
limitations. This additional time allows you to provide     extension period. The fixed-date consent is used for        
further documentation to support your position,             most examination and appeal activities. The principal        
request an   appeal if you do not agree with the            forms used are Form 872,         Consent to Extend the 
examiner’s findings or   to claim a tax refund or credit.   Time to Assess Tax,Form 872-B,           Consent to Extend 
The extended assessment      statute allows the Service     the Time to Assess Miscellaneous Excise Taxes,or 
time to properly  complete the examination of the tax       Form SS-10,         Consent to Extend the Time to Assess 
return and to make   any additional assessment or           Employment Taxes.
reduction in the previously   assessed tax liability that 
is required.

    Publication 1035 (Rev. 9-2017)  Catalog Number 46890Q  Department of Treasury  Internal Revenue Service

In an open-ended consent, the extension period                                A restricted consent is used to allow the assessment 
generally remains open until 90 days after either the                         statute to expire on the normal or previously 
taxpayer or the Service sends the prescribed notice                           extended statute expiration date with regard 
ending the agreement. The procedures for using this                           to items on the  return except those covered by 
consent are set forth in Revenue Procedure 79-22,                             the restrictive language. The consent should be 
1979-1 C.B. 563, which may be obtained by calling                             prepared by the Service,   and not by the taxpayer 
the Internal Revenue Service at 1-800-829-1040 if                             or the taxpayer’s representative. The restrictive 
the tax          return being examined is one of the Form                     statements are to be      typed on the consent form 
1040 series of returns       (for example, Form 1040,                         to ensure legal validity and to  ensure you and 
Form 1040A, Form  1040EZ) or 1-800-829-4933,                                  the Service are aware of any restrictions.      If 
if any other type of                         return is being examined. The    the restrictions will not fit on the consent form, 
open-ended consent may                       be used for cases placed in      a reference will be made on that form to an         
suspense, scheduled for                      appeals or other situations      attachment. The Service office examining your 
where it would be advantageous                      to both you and the       return is responsible for preparing the restrictive 
Service to do so.                                                             language and must obtain approval of IRS Counsel 
                                                                              as to its legal sufficiency. If you wish to add or 
Form 872-A, Special Consent to Extend the Time to 
                                                                              amend restrictions    to a consent form submitted to 
Assess Tax, is used for agreeing to an open-ended 
                                                                              you for your   signature, please discuss your request 
assessment period. However, Form 872-A may not be 
                                                                              with the Service employee requesting the consent 
used for employment taxes or certain miscellaneous 
                                                                              and the Service  generally will prepare a new 
excise taxes.
                                                                              consent form.

Restricted Consents
                                                                              Your Available Options
In addition to extending the length of the assessment 
                                                                              When asked to sign the consent extending the 
statutory period, consent agreements may also limit 
                                                                              statutory period, you have three options with rights 
further examination or appeal activities to specific 
                                                                              and alternatives for each. You have the right to:
tax issues. These agreements are called “restricted                          
consents” and have either a fixed or open-ended                               ●    Sign an unconditional consent (a fixed-date 
date of          expiration. It is the Service’s position that the                 or open-ended consent that does not limit 
taxpayer has a right to request a restricted consent;                              the examination or appeal activities to specific 
however, as a general rule, the Service will not enter                             issues). This provides the Service the same 
into restricted consents unless all of the following                               assessment authority and you the same appeal 
conditions exist:                                                                  opportunities as available under the original 
                                                                                   statutory period of limitations.
       1)        The number of unresolved issues that must 
                 be covered by the restricted consent does not                     Please note that the Service may examine any 
                 make it impractical to do so.                                     issues relevant to your tax return and make any 
                                                                                   required tax assessment during the extended 
       2)        The scope of the restrictions must be 
                                                                                   statutory period.
                 clearly and accurately described for all the               
                 unresolved issues.                                           ●    Negotiate consent terms. The Internal 
       3)        The issues not covered by the restricted                          Revenue    Code does not specify the length 
                 consent are agreed and provision is made                          of the extension   period, or the extent of 
                 for assessing any deficiency or employment                        examination or appeal      activities. This flexibility 
                 tax liability or, under certain circumstances,                    allows you and the Service   to negotiate the tax 
                 scheduling any over- assessment                (refund or         issues covered by the consent      and/or the length 
                 credit) for the agreed issues. 
                                                                                   of the extension period. During any discussions, 
       4)        The appropriate Service official approves                         factors such as the   number, type and difficulty of 
                 the use of a restricted consent.                                  issues, whether issues   that are not covered by 
                                                                                   the consent are agreed, etc., will be considered. 
       5)        The terms and language in the restricted 
                                                                                   Both you and the Service     must agree to the 
                 consent are approved by IRS Counsel prior 
                                                                                   terms of the consent     and sign the consent form 
                 to the consent being signed by the parties.
                                                                                   before it becomes     effective.

● Refuse to sign the consent –Taxes other                 Refuse to sign the consent – Certain employment 
  than certain employment taxes and certain               taxes and         certain miscellaneous excise taxes.If 
  miscellaneous excise          taxes.If you choose not   you choose not to sign the consent extending the            
  to sign the consent, we will  take steps that will      period of limitations for certain employment taxes or 
  allow us to    assess any tax we determine to be        certain miscellaneous excise taxes, we will normally 
  due. These steps      begin with the issuance of a      assess the  tax. Generally, your only    recourse is to 
  formal notice (see Notice of Deficiency, below, or      pay the tax when assessed.       You may then file a claim 
  Notice of Employment Tax Determination Under            for refund within the applicable statutory period of 
  IRC §7436, below, for explanation). This notice         limitations, and upon our disallowance of the claim 
  neither requires that you        make an immediate      or six months from the date the claim is filed, file suit 
  payment, nor that you immediately take your             in a  United States District Court or the United States        
  case to the Tax Court. The notice gives you 90          Court of Federal Claims.  A refund suit must be filed 
  days (150 days if the notice was addressed to           no later than two years from the date of the mailing 
  a person outside the United States)    to either        by the Service of the notice of claim  disallowance, 
  agree to the deficiency or employment tax               unless you and the Service agree in writing to extend 
  liability, or file a petition with the United States    the period for filing suit. Form 907, Agreement to 
  Tax Court for a       redetermination of the proposed   Extend the Time to Bring Suit, is generally used for 
  deficiency or employment tax liability.                 this purpose. (Note, however,  that if you execute a 
  If you petition the Court, you will generally           written waiver of this notice requirement, the two-
  have the opportunity for a pretrial settlement. If      year period runs from the  date the waiver is filed. A 
  agreement  cannot be reached, the case will             waiver is generally  executed on Form 2297, Waiver 
  be heard in court. Whether or not you signed            of Statutory Notice of Claim Disallowance). We will 
  a consent to extend the assessment statute of           consider a  claim for abatement of the assessment 
  limitations will have no bearing on who has the         of  c e r t a i n   employment taxes or certain 
  burden of proof in any court proceeding.                miscellaneous excise taxes if a jeopardy assessment 
                                                          (see jeopardy  assessment, below) is involved or 
  If you don’t agree and don’t file a petition during     you establish a  meritorious reason for the Service to 
  the 90-day or 150-day period, the amount shown          consider the  claim for abatement.
  in the Notice of Deficiency or Notice of Employment 
  Tax Determination Under IRC §7436 will be               Additional information concerning your appeal rights is 
  assessed and you      must make arrangements for        contained in Publication 556,         Examination of Returns, 
  payment. Under no circumstances will a penalty          Appeal Rights, and Claims for Refund. Appeal            
  be charged for not signing       the consent to extend  procedures for adverse determinations in Tax Exempt             
  the assessment        statute of limitations.           and Government Entities Division cases are explained            
                                                          in Publication 1020 and Publication 892. Copies of 
  As an alternative, you can pay the disputed             the publications and notice are available from the 
  amount of tax and file a claim for refund. The          Internal Revenue Service, free of charge, by calling 
  claim must be filed within the period of limitations    1-800-829-3676.
  for filing claims; however a timely filed claim can 
  be examined, reviewed, and appealed after the           Notice of Deficiency
  period for filing claims has expired. Of course, if 
  you wish, you can take your case to the United          If the Commissioner determines there is a deficiency 
  States District Court or the United States Court        of income, estate, gift, or certain miscellaneous 
  of Federal Claims within the period specified           excise taxes, the law authorizes the Commissioner 
  by Internal Revenue Code Section 6532. That             to send notice    of such deficiency to the taxpayer 
  section requires that you wait at least six months      by certified or registered   mail. Certain Service 
  after filing your claim with the Service before you     officials are authorized to     issue these notices for the 
  may file suit, and also requires you to file the suit   Commissioner of Internal Revenue. The notice is 
  within two years of receiving a notice that your        not an assessment of tax. It is a proposed deficiency 
  claim has been disallowed.                              and gives you 90 days (150 days if the notice was 
                                                          addressed to a person outside the United States) to 
                                                          either agree to the deficiency or file a petition    with the 
                                                          United States Tax Court for a redetermination       of the 
                                                          deficiency. Once the notice of deficiency is issued, 
                                                          the 90 or 150-day period cannot be suspended or 
                                                          extended. The notice of deficiency    can be rescinded 
                                                          under certain circumstances        if both parties agree.

Notice of Employment Tax 
Determination Under IRC § 7436
If the Commissioner makes a determination of certain       Note:  Jeopardy assessments are not made because 
employment tax issues (worker classification and/          the period of limitations for assessing the tax is about 
or section 530 determinations), the Commissioner           to expire or because a taxpayer does not consent to 
may send a Notice of Employment Tax Determination          extend the statutory period, unless the collection of 
Under IRC § 7436 to the taxpayer by certified              the tax deficiency or proposed employment tax liability is 
or registered mail. Certain Service officials              in jeopardy for the reasons described above. 
are authorized to issue these notices for the 
Commissioner of Internal Revenue. The notice is            Interest
not an assessment of tax. It is a proposed liability of 
                                                           Generally, interest continues to accrue on any balance 
employment tax and gives you 90 days (150 days 
                                                           due until full payment is made, including the time for 
if the notice was addressed to a person outside the 
                                                           appeal within the Service or the courts.  However, 
United States) to either agree to the proposed liability 
                                                           for individual taxpayers, interest on an income tax        
or file a petition in the United States Tax Court for a 
                                                           deficiency will stop accruing under certain conditions 
redetermination of the issues contained within the 
                                                           after 18 months (36 months if the Service notifies you 
notice. Once the notice is issued, the 90 or 150-day 
                                                           of the additional tax liability after November 25, 2007) 
period cannot be suspended or extended. Neither 
                                                           from the later of the return due date or the date of 
can the notice be rescinded once it is issued.
                                                           filing if filed under a valid filing extension and will start 
                                                           accruing again if payment is not timely made after 
Jeopardy Assessment                                        the Service notifies you of the additional tax liability. 
Jeopardy assessments are made when the                     Also, a cash deposit may be made to stop the accrual 
Service believes that collection of a proposed             of interest.  For information on cash deposits, please      
deficiency or employment tax liability will be             contact the Service employee requesting the consent.
endangered if we follow our regular procedures 
(see Internal Revenue Code Sections 6861                   Summary
and 6862). Jeopardy assessments are used 
                                                           This publication gives general information about the 
sparingly and only when necessary   to protect the 
                                                           consent process and options available to you should 
government’s interest. Each jeopardy     assessment 
                                                           the Service ask you to extend the statutory period of 
must receive the approval of a      designated Service 
                                                           limitations. Specific questions should be addressed to 
official. In addition, written approval  from IRS 
                                                           the Service employee requesting the consent.
Counsel (or delegate) is required.
Jeopardy assessments will be made only if one or 
more of the following conditions exist:
1.  The taxpayer is, or appears to be, planning to 
    depart the United States quickly or to conceal 
    himself/herself;
2.  The taxpayer is, or appears to be, planning to 
    place his/her property (including retirement plans) 
    beyond the reach of the government by removing 
    it from the United States, concealing it, dissipating 
    it, and/or transferring it to another person; or
3.  The taxpayer’s financial solvency is or appears    to 
    be imperiled. (This does not include  investigations 
    where the taxpayer becomes      insolvent by the 
    accrual of the proposed assessment of tax, 
    penalty, and interest.) 
The Service will promptly consider a taxpayer’s written 
request for administrative review of the decision 
that collection of the tax was in jeopardy, or that the    
amount of the assessment was excessive.