Frank Agostino wrote an article for Tax Notes Federal titled “Form 872-P Does Not Extend the Statute of Limitations for Penalties.”
In the article, Frank provides a detailed examination of the assessment framework of Form 872-P in partnership defense under the 1982 Tax Equity and Fiscal Responsibility Act (TEFRA) and Internal Revenue Code Section 6229 in a post-Loper Bright world. Despite the full name of Form 872-P, “Consent to Extend the Time to Assess Tax Attributable to Items of a Partnership,” Frank asserts that Form 872-P does not extend the statute of limitations for assessing partnership-level items like penalties, interest, and other additions to tax. Rather, filing Form 872-P only extends the partnership’s income tax assessment period.
Under TEFRA framework, Section 6229(a) establishes that the period for assessing any "tax imposed by Subtitle A" attributable to a partnership item does not expire before three years after the later of the partnership return's filing date or filing deadline. This limits the reach of Section 6229(a) to income tax, as accuracy-related penalties (Section 6662) and fraud penalties (Section 6663) are imposed under Subtitle F, Chapter 68. Penalties are considered a completely separate category, limiting Form 872-P to expressly cover tax. The operative clause in Section 6229(b)(1)(B) only extends the period to assess “the amount of any federal income tax” and “tax attributable to the following partnership items,” not penalties. While it goes in the taxpayer's favor to have ambiguity in a government-drafted waiver of limitations, Form 872-P may be a procedural trap in some cases.
Frank then examines the plain language of Form 872-P and how the IRS drafted the companion form, Form 872. Form 872 contains the language that it extends “any tax (including penalties, additions to tax and interest) attributable to any partnership items.” However, this parenthetical is omitted in Form 872-P. Frank asserts that this is clear evidence Form 872-P does not extend the penalty period. He elaborates that this is not simply a drafting oversight, because the Supreme Court confirmed in the 2023 decision Bittner v. United States (598 U.S. 85) that when a drafter includes language in one provision but omits it from a companion provision, that difference conveys a difference in meaning.
In the 2024 decision Loper Bright Enterprises v. Raimondo (603 U.S. 369) which overruled the Chevron principle established in 1984, courts are no longer expected to defer to government agencies for interpretations of statutory ambiguity. Courts can now exercise independent judgment in statutory interpretation, including the ambiguity of IRS usage of "tax" language in Form 872-P. Frank stresses that the IRS should not count on deference in a post-Loper Bright landscape, should the Form 872-P penalty scope come into question.
You can learn more about Form 872-P and its role in partnership defense by reading the complete article here.
About Frank
During his four decades of practicing tax law, Frank has been the driving force behind many successful lawsuits that sought to establish fair tax enforcement principles for taxpayers. Frank has extensive courtroom experience, litigating more than 100 tax matters, several of which established important precedents for taxpayers.
