Rev. Proc. 71-11

Section 1. Purpose

The purpose of this Revenue Procedure is to announce adoption of Form 872-A, Special Consent Fixing Period of Limitation Upon Assessment of Income Tax, and to state the circumstances for its use.

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, C.B. 1957-1, 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 income tax cases in which Appellate Division consideration has been requested, or which are under Appellate Division consideration, in order to provide adequate time for consideration of disputed issues. Under existing procedures, Form 872, Consent Fixing Period of Limitation Upon Assessment of Income 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, and where extension of the period for assessment is requested prior to transfer of the case to the Appellate Division. As a result, the period of limitation may be extended by use of Form 872 beyond the time required for Appellate Division consideration, or it may be necessary to request a renewal consent if inadequate time was provided by the first consent.

.03 In order to relieve taxpayers and the Service from the irritations and difficulties 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 Appellate Division consideration, Form 872-A is provided.

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 Appellate Division consideration, or (2) receipt by the regional Appellate Division branch office considering the case of written notification from the taxpayer(s) of election to terminate the agreement; except that if in either event a statutory notice of deficiency in tax for any such year(s) is sent to the taxpayer(s), the running of the time for making any assessment shall be suspended for the period during which the making of an assessment is prohibited and for 60 days thereafter. If such statutory notice is sent to the taxpayer(s) and neither of the conditions enumerated (1) and (2) in the preceding sentence have occurred, the time for making such assessment will expire 60 days after the period during which the making of an assessment is prohibited. However, Form 872-A will in no event operate to reduce the time for assessment otherwise provided by law.

.02 Notification by the Service to the taxpayer of termination of Appellate Division consideration will normally be accomplished by issuance of a form letter indicating the basis upon which consideration is terminated. Form 872-A provides that ninety days will thereafter remain for assessment of tax. Receipt by the Appellate Division branch office considering the case of written notification from the taxpayer of election to terminate the agreement will likewise start the running of the ninety-day period for assessment.

.03 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 69-8, C.B. 1969-1, 399, for use of Form 872 in such cases.

.04 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 in which Appellate Division consideration has been requested, or by Assistant Regional Commissioners (Appellate) or their delegates with respect to cases under Appellate Division consideration.

.02 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.

.03 Form 872 will be accepted in any case where 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 of attention and expeditious consideration as those involving Form 872.