IRS Letter 907: Request to Extend Assessment Statute (Form 872)

Letter 907 is the IRS's cover letter transmitting Form 872, Consent to Extend the Time to Assess Tax. The IRS is asking you to voluntarily extend the three-year statute of limitations on assessment under IRC Section 6501. Signing Form 872 is a significant decision. The IRS does not have unilateral authority to extend the statute. Your signature is required, and refusing is a lawful option with concrete consequences.

Why the IRS Asks

The IRS asks when an examination is not complete and the three-year assessment deadline is approaching. Without an extension, the examiner's options narrow sharply. The IRS can issue a statutory notice of deficiency immediately on the information in the file, which usually means proposing the worst-case numbers because unresolved items get disallowed. Signing Form 872 gives the examiner more time to finish the audit and gives you more time to produce documentation and negotiate.

Fixed-Date vs. Open-Ended Extensions

Form 872 extends to a specific date you negotiate (usually 6 to 12 months out). Form 872-A is an open-ended consent that remains in effect until either side terminates it with Form 872-T. Open-ended consents can run for years. Fixed-date consents are almost always preferable because they create a hard deadline the IRS has to work toward.

When Not to Sign

Refusing to extend is appropriate when the examiner has had ample time, the proposed adjustments are small enough that a statutory notice would not be worse than continued negotiation, or you have strong reason to believe the examiner will not be reasonable with additional time. Refusal forces the examiner to issue a statutory notice of deficiency within the three-year window, which gives you access to Tax Court on a predictable schedule.

Scope Limitations

Form 872 can be limited to specific issues, specific entities, or specific tax years. You are not required to sign an extension that opens up every item on the return. Negotiate scope limitations in writing on the form itself. The IRS routinely accepts limited consents when asked.

If you received Letter 907 with a Form 872 attached, call us at (813) 229-7100 before signing. The decision depends on the posture of the audit, the likely assessment, and the quality of your position.