Signed, Sealed, and Stuck: Tax Court Holds Form 872-T Cannot Cut Short a Fixed-Date Form 872 Consent to Extend the Statute of Limitations

By: Priscilla Ayn Parrett

Have you signed a Form 872 and now want to limit the time that the Internal Revenue Service (IRS) can issue an assessment? The Tax Court says you can’t. In Barry Holmes Fine & Monica Dias v. Commissioner, 167 T.C. No. 13 (Sept. 30, 2026), the Court held in a precedential opinion that a taxpayer cannot use Form 872-T to terminate a properly executed, fixed-date Form 872: “only the passage of time can terminate Form 872.”

The Forms 872: Not All Consents to Extend the Statute Are Created Equal

The IRS generally has three years after a return is filed to assess tax. I.R.C. § 6501(a). Under § 6501(c)(4)(A), the taxpayer and the IRS may agree in writing, before that period expires, to extend it, and may extend it multiple times by written agreements made before each prior extension runs out. Each time the IRS asks to extend the statute, it must inform the taxpayer of the right to refuse and the right to limit the extension to particular issues or to particular tax periods that are otherwise under audit. § 6501(c)(4)(B). Courts treat these consents as a taxpayer’s waiver of a limitations defense rather than a contract, but they apply contract principles to determine what the parties agreed to.

There are a number of related IRS forms bearing the number 872, with and without a letter designation following the number, and as the Court recently held, the differences between the forms can be significant. For purposes of this article, we are specifically addressing the differences between Forms 872, 872-A, and 872-T. But note that there are specific Forms 872 for partnerships, excise taxes, and employment taxes.

Form 872 is a fixed-date extension that extends the statute of limitations to a specific date. For example, if the three-year statute would have expired on Dec. 31, 2026, the IRS may request that the taxpayer sign a 12-month extension to Dec. 31, 2027.

By contrast, Form 872-A is open-ended and the extension of the statute of limitations granted under it terminates only upon the occurrence of one of three actions: 1) the taxpayer submits a Form 872-T to the IRS, 2) the IRS sends a Form 872-T to the taxpayer, or 3) the IRS issues a notice of deficiency. Unless one of those three actions takes place, the statute of limitations remains open indefinitely.

The Tax Court’s Opinion in Fine v. Commissioner

The issue before the Court was whether a submission of a Form 872-T by the taxpayer to the IRS terminated the extension of the statute of limitations previously granted by the taxpayer to the IRS under a Form 872. During an examination of their 2015 and 2016 returns, the taxpayers signed Forms 872 extending the assessment period for 2015 to Dec. 31, 2020, (later extended again to Dec. 31, 2021) and for 2016 to June 30, 2021. After settlement talks with the IRS Independent Office of Appeals (Appeals) failed, their counsel faxed Forms 872-T to IRS personnel on Sept. 11, 2020, with cover letters seeking to end the extensions and requesting prompt notices of deficiency. Because Form 872-T offers no option for terminating a Form 872, the box for terminating a Form 872-A was checked, and copies of the Forms 872 were attached. The IRS issued notices of deficiency dated April 15, 2021, which was more than 90 days after the Forms 872-T were sent, but within the fixed-dates listed on the Forms 872. The taxpayers argued the notices were untimely because the IRS had only 90 days after receiving Forms 872-T to issue the notices of deficiency. The IRS disagreed, arguing that fixed-date Forms 872 cannot be terminated by a Form 872-T.

In granting the IRS’s motion for partial summary judgment, the Court started with § 6501(c)(4)(A) and the “four corners” of the forms. It contrasted Form 872’s bargained-for expiration date with Form 872-A’s indefinite term under Rev. Proc. 79-22 and noted that the Court has historically treated the termination methods listed on Form 872-A as exclusive. Drawing on the general contract rule that agreements of indefinite duration are terminable at will while agreements with a specified term are enforced as written, the Court emphasized that Form 872-A expressly references Form 872-T, Form 872-T references only Form 872-A, and Form 872 says nothing about Form 872-T. The Court rejected the taxpayers’ fairness argument, explaining that the IRS’s issuance of a notice of deficiency before the agreed date is simply timely action, not a unilateral termination of Form 872 by the IRS. The Court observed that the taxpayers could have negotiated a shorter period, limited the extension to certain issues, or declined later extensions, and that dissatisfaction with Appeals is not a basis to undo a valid agreement. The Court ultimately held that because Form 872-T was invalid, the notices of deficiency were timely mailed.

Careful Consideration Before Signing Any Form 872 is Key

Before signing any consent to extend the statute, taxpayers should carefully consider a few key points:

Know what you are signing. Read the title and the expiration line before signing. A Form 872 ends only on its stated date; a Form 872-A stays open until it is terminated by one of the methods printed on the form. Careful consideration should be given regarding whether to sign a Form 872 versus a Form 872-A. Although using a Form 872-A does not on its face limit the extension to a certain period, as discussed above, it does allow a taxpayer the option to terminate the extension by submitting a Form 872-T. Using Form 872-A therefore provides taxpayers the ability to continue to assess their audit defense strategy after granting the extension and to terminate the extension as necessary. Also consider the scope of the request and note whether all items on the return are being held open, or only certain issues.

Decide whether signing makes sense in your case. You may refuse or ask to limit the extension to particular issues or to a shorter period, though the IRS is not required to agree to a restricted or shortened consent. Refusing to sign may prompt the IRS to issue a notice of deficiency, which preserves your right to petition the Tax Court but may cut off further examination or Appeals discussions before the case is fully developed. Taxpayers must carefully consider the specific facts of their case and audit to determine whether signing, or refusing to sign, is the more advantageous path.

Keep track of all signed agreements and make sure you understand what was signed. If you signed a Form 872, you could let it run and decline any further extension request, at which point the IRS must issue a notice of deficiency or let the period expire. If you signed a Form 872-A, you may terminate it only by filing Form 872-T. Keep copies of the forms and keep track of the new deadlines.