Rev. Proc. 79-22
Section 1. Purpose.
Rev. Proc. 71-11, 1971-1 C.B. 678, states the conditions under which the Internal Revenue Service will accept Form 872-A, Special Consent to Extend the Time to Assess Tax. The purpose of this Revenue Procedure is to supersede Rev. Proc. 71-11 and to incorporate herein similar conditions with respect to the acceptance of consents on Form 872-A by Appeals officials and, in certain instances, by District Directors of Internal Revenue.
Sec. 2. Background.
.01 Present Internal Revenue Service practice provides that consents to extend the period of limitation upon assessment will be secured only in unusual circumstances, to keep to a minimum the number of consents obtained from taxpayers. See Rev. Proc. 57-6, 1957-1 C.B. 729. Service practice also contemplates that the period of any extension obtained shall be limited to the minimum time required for consideration and processing of such cases.
.02 It is often necessary to request extensions of the period of limitation in tax cases to provide adequate time for consideration of disputed issues. Under existing procedures, Form 872, Consent to Extend the Time to Assess Tax, is executed extending the period for assessment to a specified date. It is often difficult, however, to forecast the time required for adequate consideration of a case, particularly where complex or intricate questions of fact or doubtful issues of law are present. As a result, the period of limitation may be extended by use of Form 872 beyond the time required for Internal Revenue Service consideration, or it may be necessary to request a renewal consent if inadequate time was provided by the first consent.
.03 Form 872-A is provided to relieve taxpayers and the Service from the inconvenience of obtaining renewal consents, to relieve the Service, in part, of the problems of maintaining controls to ensure that the period of limitation does not expire during consideration of a case, and to provide a means of restricting the period of limitation to the minimum time required for Service consideration.
Sec. 3. Effect of Form 872-A.
.01 Form 872-A extends the period of limitation to a date 90 days after (1) mailing by the Internal Revenue Service of written notification to the taxpayer(s) of termination of Service consideration, (2) receipt by the Internal Revenue office considering the case of written notification from the taxpayer(s) of election to terminate the agreement, or (3) mailing by the Internal Revenue Service of a notice of deficiency; except that in the event a notice of deficiency for any such year(s) is sent to the taxpayer(s), the time for making such assessment for the periods stated in the notice of deficiency will expire 60 days after the period during which the making of an assessment is prohibited. A final adverse determination subject to declaratory judgment under sections 7428, 7476, or 7477 of the Code will not terminate Form 872-A.
.02 Form 872-A will in no event operate to reduce the time for assessment otherwise provided by law.
.03 Written notification by the Service to the taxpayer of termination of Service consideration will be accomplished by issuance of Form 872-T, Notice of Termination of Special Consent to Extend the Time to Assess Tax. Form 872-A provides that 90 days will thereafter remain for assessment of tax. In this regard, mailing of a notice of deficiency will constitute written notification of termination of Service consideration in lieu of mailing Form 872-T. Receipt from the taxpayer(s) of Form 872-T by the Internal Revenue Service office considering the case will likewise start the running of the 90-day period for assessment.
.04 Form 872-A will be accepted as one properly executed consent covering a parent corporation and any or all of its subsidiary corporations, under the same conditions and procedures as are provided by Revenue Procedure 72-38, 1972-2 C.B. 813, for use of Form 872 in such cases.
.05 The six-month period provided by section 6511(c) of the Internal Revenue Code of 1954 for filing a claim for refund or credit, after expiration of the period for assessment as extended by agreement, is available whether extension is by Form 872-A or by Form 872.
Sec. 4. Procedures.
.01 Form 872-A will be accepted in place of Form 872, either by District Directors of Internal Revenue or their delegates with respect to cases placed in suspense or in which Appeals consideration has been requested, or by Appeals officials with respect to cases under Appeals consideration. Form 872-A will be accepted in other instances when its use would be advantageous to both the taxpayer and the Service.
.02 With the exception of the mailing of a notice of deficiency, written notification by the Service to the taxpayer(s) of termination of Service consideration can only be made using Form 872-T.
.03 Written notification to the Internal Revenue Service from taxpayer(s) of an election to terminate Form 872-A is to be made using Form 872-T. Taxpayer(s) should sign and mail Form 872-T in accordance with instructions contained on the form.
.04 Steps taken to terminate Forms 872-A by the Service or the taxpayer(s) other than by using Forms 872-T (e.g., by letter or orally) will not terminate Form 872-A.
.05 If a Form 872-A is for chapter 42 taxes, a separate Form 872-A will be requested from each potential disqualified person or entity that may have been involved in a taxable transaction during the relevant tax year.
.06 Form 872-A will be requested only at the time that Form 872 would normally be requested, in accordance with the policy expressed in Revenue Procedure 57-6.
.07 Form 872 will be accepted in any case in which the taxpayer prefers not to execute Form 872-A. It is anticipated, however, that Form 872-A will be executed in most of the instances for which its use is applicable. Cases involving Form 872-A will receive the same priority handling and expeditious consideration as those involving Form 872.
Sec. 5. Effect on Other Documents.
Rev. Proc. 71-11 is superseded.