872-H

[austin3515]

This is a "Consent to Extend the Time to Assess Tax on a Trust" Basically the IRS is auditing 2010, is afraid they won't finish their audit in time and wants the taxpayer to extend the statute of limitations for another year.

It says right on the form: "The taxpayer(s) has the right to refuse to extend the period of limitations or limit this extension to a mutually agreed-upon issue(s) or mutually agreed-upon period of time."

Question: Why in the name of all that is logical would a sponsor sign such a form?

[QDROphile]

The thought is that the IRS may be forced into hastily asserting liability to preserve possible claims. Once the IRS is in that posture, it is more difficult to deal with and it might want some blood for the extra adminstrative trouble instead of some more cooperative resolution of any issue of interest. I have only refused to extend the statute once. That was with the Department of Labor when it was so far out of line with its original assertions and general rudeness in the process that things could not get worse. That is not typical of my experience with the DOL. We tend to get constructive behavior from IRS agents, too, so we generally accommodate.

[Peter Gulia]

When the IRS requests an extension, a savvy taxpayer sometimes demands as the extension's price a written closing agreement that some issues are removed from the examination and forever closed.

But others, especially those that fear the expense of proving that the taxpayer was correct, indulge the IRS for reasons of the kind that QDROphile describes.

[austin3515]

I have to say that it sounds a lot like blackmail as described. I suppose only those with deep pockets who are willing to "sic the lawyers" are afforded such protections.