Chapter 10 - Chapter 10 Statute of Limitations on...

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Chapter 10 Statute of Limitations on Assessment 1. Answer: This question has been inserted to allow you to discuss your views on extending the statute of limitations. There is obviously no hard and fixed rule that can be expounded; however, in the authors’ view, a Form 872 for a reasonable period of time should be granted under circumstances where it would be in the best interest of the taxpayer. Generally, it is not in the taxpayer’s best interest, for example, to grant such an extension if Criminal Investigation (CI) has entered the case or if in all likelihood the statute of limitations in a given year would expire prior to the time within which the IRS could make an assessment that is not clearly arbitrary and capricious. Caveat: A representative is not authorized to execute a Form 872 when the power of attorney has been revoked by incapacity (incompetence) of the taxpayer. Theodore Halper v. Commissioner, 73 TCM 1897, TC Memo. 1997-58, CCH Dec. 51,861(M). 2. Answer: In the authors’ view, it is generally in the best interest of the taxpayer to execute a Form 872 rather than a Form 872-A. Execution of a Form 872-A places the burden upon the taxpayer or the taxpayer’s representative to terminate the time within which the IRS must act. The primary instance that a Form 872-A may be beneficial is when you are closely involved and intimately familiar with the taxpayer’s case and have an opportunity to terminate the extension. For example, if an Agent wants an
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Chapter 10 - Chapter 10 Statute of Limitations on...

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