Signing Form 870 or Form 4549: what agreeing to an examination does and does not do

What the signature waives

IRC 6213(a) bars the IRS from assessing an income, estate, gift or certain excise tax deficiency until it mails a notice of deficiency and the 90-day (or 150-day) period passes, or a Tax Court decision becomes final. IRC 6213(d) lets the taxpayer give up that protection: the taxpayer has the right, by a signed written notice, “to waive the restrictions provided in subsection (a) on the assessment and collection of the whole or any part of the deficiency,” whether or not a notice has been issued. Form 4549's signature line and Form 870 are that written notice.

The practical effect, in IRM 4.10.8.2.2's words: “By signing, the taxpayer is indicating they do not wish to exercise appeal rights with regard to the adjustments reflected in the report.” Once the waiver is processed, the IRS assesses and bills, and the prepayment route to the Tax Court for those adjustments is gone. What remains is to pay and file a refund claim, then sue if it is denied. See refund claims and suits.

What stays open

A signed Form 870 or 4549 is not a settlement. IRM 4.10.8.2.2 says: “Signing the waiver does not preclude assertion of a further deficiency by the Commissioner or a request for further consideration of the issues by the taxpayer.” Form 870 itself tells the taxpayer that “It will not prevent us from later determining, if necessary, that you owe additional tax” (quoted in IRM 25.6.22.7.1). So, after signing:

1. The IRS can still examine the year further and propose more tax, if the statute is open and its reopening rules allow (see closing an exam).
2. The taxpayer can still claim a refund of the agreed tax, within the IRC 6511 limits.
3. The taxpayer can still ask for audit reconsideration of an unpaid assessment with new information.
4. The statute is not extended. IRM 25.6.22.2 says the execution of Form 4549 or Form 870 does not extend the time to assess.

An agreed overassessment works as a refund claim. IRM 4.10.8.10.1 says the IRS considers an agreement or waiver in the Form 870 series “to be a valid claim for refund when the taxpayer agrees to an overassessment determined by the IRS,” which is why examiners do not invite separate claims in agreed cases.

Which form, which effect

Excepted agreed cases are those where the taxpayer agrees but the result is subject to further review or processing: partial agreements, whipsaw issues between related taxpayers, Joint Committee cases, transferee cases and Fast Track Settlement cases settled on hazards (IRM 4.10.8.5). The waiver there is Form 870, and the case is excepted from the reopening criteria.

Interest and payment

Signing has a direct interest effect. Under IRM 4.10.8.2.4.2, “A signed agreement or waiver stops the running of interest 30 days from the date of receipt if the assessment and notice for payment are not made within the 30-day period.” That is the IRC 6601(c) rule. The examiner date-stamps the receipt date on the form, so keep proof of when it was delivered.

Paying in full without signing has a different result. Examiners may close a case as agreed when a full payment, not designated as an IRC 6603 deposit, arrives and there is no sign the taxpayer plans to protest; but the interest suspension does not apply to a payment in lieu of agreement. Once billed, Pub 3498 (Rev. 5-2025) says no further interest or penalties accrue if an amount under $100,000 is paid within 21 calendar days, or 10 business days for $100,000 or more. If the client cannot pay, examiners are told to discuss an installment agreement (Form 9465) when payment is not possible within 120 days; see installment agreements. Examiners also remind taxpayers that federal changes are shared with states, which may require an amended state return.

Joint returns, conditions and fax

For a joint return, IRM 4.10.8.2.4.2 requires both spouses' signatures (or their authorized representatives') to process the case as agreed, unless the deficiency is paid in full. If only one signs, the signing spouse is assessed separately and unagreed procedures, including a notice of deficiency, apply to the other. If innocent spouse relief is in play, think about that split before either spouse signs; see innocent spouse relief.

Do not add words to the form. The IRM tells examiners to be very cautious with forms carrying writing other than signatures and says “Conditional statements will invalidate an agreement or waiver.” If your client agrees only on a condition (for example, that a related year is adjusted in a particular way), negotiate the condition into the report or a closing agreement instead.

The IRS accepts signed agreements by fax and by its Enterprise eFax system for any amount, with documentation of the contact. A representative can sign if the power of attorney authorizes it; Form 2848's acts-authorized language includes signing agreements and consents.

Partial agreements

When some issues are agreed and others are not, the examiner offers a partial agreement on Form 870 for the agreed adjustments only (IRM 4.10.8.6). Before an Appeals request, the taxpayer receives a regular report showing everything plus an agreed Form 4549-A with a Form 870, generally with 15 days to respond (Letter 1967). After the agreed amount is assessed, a total report shows all adjustments and only the remaining unagreed deficiency, which then follows the unagreed path. Partial assessments are not allowed in some cases, including Joint Committee cases, docketed cases and years where agreed tax-reducing items offset unagreed tax-increasing items. Partial agreement narrows what Appeals has to decide, and the 30-day interest rule for signed waivers applies to the agreed part.

Before your client signs

A short checklist keeps a signature from creating new problems. Confirm the report covers every year and issue you expect, and that the arithmetic, including penalties and carryover effects, is right. Confirm whether the case is regular agreed or excepted agreed, because that tells you whether reopening rules apply. Check whether a refund claim for any other issue should be filed first, since the refund statute keeps running. Decide whether the client will pay at signing (interest stops on payment) or wait for the bill. On a joint return, confirm both spouses will sign. And keep a copy of the signed form with proof of the date the IRS received it.

Agreeing after a notice of deficiency

A notice of deficiency includes a waiver form. Signing and returning it lets the IRS assess before the 90 days end. A payment without a signed waiver after the notice is handled differently: under Rev. Proc. 2005-18, cited in IRM 4.19.13.13, a case with payment received after the notice cannot be closed until the petition period has expired without a petition. Paying does not take away the right to petition. See the notice of deficiency.

When agreement is final: 870-AD and closing agreements

The forms with real finality are Appeals' Form 870-AD and closing agreements. IRM 4.13.1.4.5 lists the cases the IRS will not reopen for audit reconsideration, including cases closed with a Form 906 or Form 866 closing agreement and an “Appeals mutual concession settlement using a Form 870-AD”. If your client wants an issue settled for good, for the exam year and beyond, the tool is a closing agreement, not a signature on Form 4549. LB&I uses closing agreements for recurring issues (IRM 4.46.5.6).

Employment tax agreements

Employment tax exams use the Form 2504 series. Pub 5146 (Rev. 1-2026) describes Form 2504 for adjustments not subject to IRC 7436, Form 2504-T for adjustments subject to IRC 7436 (worker classification and section 530 issues), and Form 2504-S. Like Form 870, the agreement does not bar a later refund claim or further tax, and “It will also not extend the time provided by law for either action.” For interest-free adjustment treatment, IRM 4.23.8.3.1 requires full payment when the signed Form 2504 is submitted. See employment tax examinations.

Questions practitioners ask