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Navigating statute of limitations extension agreements, P.2

On Behalf of | Dec 5, 2016 | Audits |

We’ve been looking in recent posts at extension agreements between the IRS and taxpayers, which extend the deadline for IRS to assess additional tax and can allow taxpayers more time to provide documentation when they disagree with IRS audit findings.  

As we noted, taxpayers do not have to agree to an extension, and they have several options with respect to the type of agreement they make with the IRS. One option, known as an unconditional consent, can be either open-ended or a fixed date. In this type of agreement, the IRS and the taxpayer retain all of the examination and appeal rights they had prior to the expiration of the statute of limitations. This could be beneficial for the taxpayer in some circumstances, but there may be certain cases where the taxpayer doesn’t want the IRS to retain all its examination and assessment rights. 

In such cases, a taxpayer may have the ability to negotiate an extension agreement with the IRS which does not provide a specific date or length of time, or specify which issues can and cannot be examined or appealed. With this approach, it can be helpful to work with an experienced attorney to ensure the taxpayer’s interests are represented in the agreement.

A third option is to refuse to agree to an extension agreement. There are risks to doing so, but the consequences can be different for different types of taxes. Tax other than employment and certain excises taxes involve a process whereby the taxpayer has additional time to either agree or disagree to a deficiency assessment, whereas assessments for these taxes are normally assessed without the taxpayer having any recourse.

Again, working through the audit process and navigating extension agreements can be a complicated process, and it can be an indispensable help to work with an experienced advocate who can ensure that the taxpayer’s rights and interests are zealously advocated.

We insist that your taxpayer rights are protected and your options are known.

Our services are confidential and are protected under the attorney-client privilege as allowed by law.