When an examiner may ask
"It is the policy of the IRS to secure consents to extend the period to assess tax only in cases involving unusual circumstances ... If it is necessary to extend the statute, the period of extension must be no longer than is necessary to complete the examination and other administrative actions." An examiner "must obtain the approval of their group manager before requesting a consent," except "to solicit a consent solely so the case can go to Appeals" (IRM 25.6.22.2.1, Nov. 17, 2021).
The manual lists the conditions that justify a request. The two that reach payers: "The limitation period for a taxable year under examination will expire within 180 days and there is insufficient time to complete the examination," and "The statute of limitations for the taxable year under examination requires extension so the case can go to Appeals," with the note that "There must be at least 395 days remaining on the assessment statute of limitations when the case is received by Technical Services and at least 365 days remaining ... when the case is received by Appeals" (IRM 25.6.22.2.1). That second condition is why a request can arrive when the statute still looks comfortable to you: an unagreed case cannot leave the examiner for Appeals with less than thirteen months on the clock. The statute page covers how the IRS tracks those dates internally.
Two further rules protect the payer. "A consent will not be requested in any case in which no previous contact was made with the taxpayer," absent compelling reasons that must be documented. And for a year you reopened yourself with a refund claim, "the taxpayer will not be routinely requested to agree to a consent ... unless new information or the re-examination of the return indicates that a redetermination of the tax liability may result in tax deficiencies," though the IRS notes the claim "can be offset by additional taxes attributable to adjustments discovered through the re-examination process after the period for assessment has expired" (IRM 25.6.22.2.1).
What you must be told
Each time a consent is requested the IRS "must notify the taxpayer of the following rights": "The right to refuse to extend the period of time for assessment. The right to request that the extension be limited to particular issues. The right to request that the period for assessment be limited to a particular period of time, for example, to a specific date" (IRM 25.6.22.3, Mar. 26, 2019). The notice comes with the form itself, Letter 907 and Publication 1035, and the employee must document that it was given.
The request must go to the taxpayer and to the authorized representative, with Letter 937 to the representative. Mailed requests allow "at least 10 calendar days from the date of the letter" to respond (IRM 25.6.22.4.2, Mar. 26, 2019). If you ask questions, the examiner is instructed to explain "in plain language, the reason for the request, and any other pertinent information, such as how the proposed extension date was determined and the fact the statute can, if necessary, be extended again" (IRM 25.6.22.3). Ask. The reason and the date arithmetic are things the examiner must give you and must record having given.
Your options, and which the IRS will grant
IRM 25.6.22.3, 25.6.22.8.1, 25.6.22.8.2.
On restricted consents the manual is candid: "the taxpayer's right to a restricted consent is the right to request a restricted consent. The IRS is not compelled in all circumstances to agree" (IRM 25.6.22.8.1, Aug. 26, 2011). It will normally agree when "The number of unresolved issues ... do not make it impractical," "The scope of the restrictions must be clearly and accurately described," "The issues not covered by the restricted consent are agreed," an official approves, and "The wording in the restricted consent is approved by Area Counsel"; and "Restricted consents will be discouraged, if possible, until the examination is completed to the extent that all potential issues have been identified" (IRM 25.6.22.8.2). For a backup withholding case where the only open question is, say, the Forms 4669 for one group of payees, a consent restricted to that issue is the kind the IRM contemplates. For a case still being developed, expect refusal.
What Form SS-10 covers
Form SS-10 is the employment tax consent, and backup withholding falls within it: the form covers FICA, FUTA, railroad retirement and "IRC provisions relating to collecting income tax at the source on wages and other payments and distributions (Form 941; Form 943; Form 944 and Form 945, Annual Return of Withheld Federal Income Tax)" (IRM 25.6.22.6.10, Aug. 26, 2011). Two consequences follow. "The consent (Form 872, for example) obtained to extend the income tax return of the employer does not extend the period of time for assessment of employment taxes," so a Form 872 you signed in an income tax audit leaves the Form 945 year untouched. And "A single consent may be used to cover all quarterly returns filed for employment taxes as well as other returns which report the same type of employment taxes," naming Form 945 alongside Forms 941, 943 and 944, so an SS-10 drafted for the withholding provisions over a calendar year reaches your Form 945 even if the examination began with Form 941. Read the "kind of tax" lines and the period range before signing; the IRM's own examples run "from January 1 ... through December 31."
The information return penalties under IRC 6721 and 6722 are not employment taxes and are not on Form SS-10. They are assessable penalties, and the manual's route for those is a modified Form 872: the consent "can be modified to extend the period of time for assessment of assessable penalties, so long as the period of limitations to assess the penalties is still open" (IRM 25.6.22.6.17.10, Nov. 17, 2021). A 972CG case headed to Appeals late in its statute may therefore come with a Form 872 carrying added penalty language rather than an SS-10. The consent runs to a fixed date; open-ended Form 872-A consents exist for income tax but are not the employment tax form (IRM 25.6.22.5.7).
Who signs for the payer
"Corporations: The consent must be signed by a corporate officer authorized to execute the consent." "Partnership: Any general partner authorized to bind the partnership may sign the consent, even if they did not sign the return." For an LLC "classified as either a partnership or corporation: any officer or other person authorized to bind the LLC under the terms of LLC operating agreement may sign" (IRM 25.6.22.6.10). The single-member LLC is the case to watch. For employment tax periods beginning on or after January 1, 2009, "single-owner LLCs will no longer be classified as disregarded entities for employment tax purposes," so "the consent must be secured from the LLC for employment tax issues," in the LLC's name (IRM 25.6.22.6.10; 25.6.22.6.17.9). A sole proprietor signs as "Jane Salmon dba Veterinary Clinic." A representative may sign only under a power of attorney that is "specifically showing type of tax and years covered and not merely 'all years' or 'all taxes'" and "specific in authorizing the representative to sign consents" (IRM 25.6.22.5.8.1, Nov. 17, 2021); an unenrolled preparer generally cannot. Fax signatures are accepted when the examiner confirms by contact and documents it (IRM 25.6.22.5.1).
What the examiner does with your signature
The consent "contains the entire terms," so "any restriction(s) must be included on these consent forms or clearly referenced on the forms to be binding." If you sign but say the signature "is predicated on some term or condition not included or referenced on the consent form," the examiner must "consult Area Counsel before proceeding" (IRM 25.6.22.5.12, Nov. 17, 2021). Publication 1035 asks you to discuss changes with the examiner, who "generally will prepare a new consent form," rather than editing the one you were sent.
After receipt the examiner checks that the form was date-stamped, that it was "properly executed by the taxpayer or signed by an authorized representative with authority to do so, and the taxpayer has not made any alterations on the consent or imposed any restrictions," and that the delegated IRS official has countersigned (IRM 25.6.22.5.12). An unsigned IRS copy is not an executed consent. Letter 929 may be used to send you the executed copy; if it does not arrive, ask for it, because the signed consent is the document that proves which periods and taxes were extended and to what date. Earlier consents are kept with later ones, since each later extension is valid only if the statute was still open when it was signed.
If you decline
"If a taxpayer chooses to exercise their right to decline to extend the statute, it will be explained to the taxpayer ... that a statutory notice of deficiency may be issued or other appropriate action taken in those instances when a notice of deficiency is not first necessary in order to assess tax" (IRM 25.6.22.3). Backup withholding and the information return penalties are assessed without a deficiency notice, so for a payer the "other appropriate action" is an assessment of the examiner's figures before the statute runs.
For a backup withholding examination that means the examiner closes the case unagreed on the existing record and the amount is assessed; the Letter 950-D page describes the 30-day letter that precedes it and the Appeals guide what remains afterward. Declining is sometimes the right answer: when the examiner's proposed figure is small, when the open issue is one you will lose anyway, or when the statute is close enough that the IRS cannot complete the work it would need to increase the figure. It is rarely right when you expect to win in Appeals, because an assessed employment tax reaches Appeals only after payment and a refund claim, with the two-year suit clock running. The examiner "is not compelled to agree" to a short extension, but a counter-offer of a date that allows the Appeals minimum and no more is the usual middle ground.
What to do
- Ask why and how the date was chosen. The examiner must explain both and record having done so. If the reason is Appeals, the date will be about 395 days out; if it is unfinished work, ask what work.
- Read the kind-of-tax lines and the period range. An SS-10 for withholding over a calendar year covers Form 945 even if the examination was about Form 941. A Form 872 from an income tax audit does not cover Form 945 at all.
- Request a restriction only when the record supports it. Few issues, clearly described, everything else agreed. Ask the examiner to prepare the form; do not edit the one you were sent.
- Sign in the right name. The LLC for periods after 2008, not its owner; an officer for a corporation; a representative only under a 2848 that covers these taxes and periods.
- Get the countersigned copy. The consent is executed only when the IRS official signs; keep it with the earlier ones.
- Decide about declining on the Appeals question. Refusing trades a hearing before assessment for a refund suit after it.
Questions people ask
Does signing an SS-10 admit anything?
No. It extends the time the IRS has to assess the listed taxes for the listed periods, nothing more. The form "contains the entire terms of the consent," and those terms are about time.
We already signed a Form 872 in our corporate income tax audit. Does the Form 945 year stay open too?
No. The manual states that an income tax consent "does not extend the period of time for assessment of employment taxes." A Form 945 year needs its own SS-10.
Can we limit the consent to the backup withholding issue and exclude everything else?
You can ask. The IRS normally agrees when the open issues are few and clearly described, the rest of the examination is agreed, and Counsel approves the wording; it normally refuses while the examination is still open-ended. Restrictions must be written into the form the IRS prepares.
What if the 972CG penalty is the only thing in dispute?
The information return penalties are assessable penalties, not employment taxes, so the vehicle is a Form 872 with added penalty language rather than an SS-10. The same rights and the same Appeals arithmetic apply.