Form 870: what the waiver of restrictions on assessment does and does not do

Like Form 872, Form 870 is prepared by the examiner (in Report Generation Software, under "Waivers") rather than downloaded, and the IRS does not post it on IRS.gov. This page relies on the Internal Revenue Code and the IRM.

When Form 870 is used (and when another form is right)

The statute behind the form is IRC 6213(d): the taxpayer may “by a signed notice in writing filed with the Secretary, to waive the restrictions provided in subsection (a) on the assessment and collection of the whole or any part of the deficiency.” Without a waiver, the IRS cannot assess an income, estate or gift tax deficiency until a notice of deficiency has been issued and the Tax Court period has run (see the 90-day letter).

Most agreed exams use Form 4549 instead, which has a signature block that serves as the waiver. Form 870 comes in where the report form has no signature line. IRM 4.10.8.2.2 explains that Form 4549-A has no place for the taxpayer to sign, and “If Form 4549-A is issued in an unagreed or partially agreed case, examiners typically prepare and provide Form 870” to solicit a consent to assessment. The same subsection describes the 870 series as used “in excepted agreed cases and unagreed cases requiring a Preliminary (30-day) letter.”

What the form contains

Because the examiner prepares the form, the practitioner's role is to check it against the report. Based on the IRM, a Form 870 package contains:

IDTaxpayer names and identifying numbers

Both spouses for a joint return. A Form 870 signed by spouses is not itself a joint return election (IRM 4.10.8.14.6.1).

PeriodsTax years and the deficiency or overassessment for each

In a partially agreed case, the Form 870 reflects only the agreed deficiency; the Form 4549-A "Agreed" report shows the agreed adjustments behind it (IRM 4.10.8.6.2.1).

PenaltiesPenalty amounts by year

Agreed penalties appear with the tax. Penalties that require written supervisory approval under IRC 6751(b) should already have it; see supervisory approval.

StatementsAttached statements, if any

Special situations add language headed as attached to and made part of the Form 870. IRM 4.10.8.11, for example, prescribes statements making a personal holding company waiver subject to approval of Form 2198.

SignTaxpayer signature and date

Signed by the taxpayer (both spouses for a joint deficiency) or an authorized representative. IRM 4.10.8 says the IRS can accept consents to assess additional tax, such as Form 4549 or Form 870, by fax, with the contact documented in the case file.

IRSAcceptance

The waiver takes effect when filed with the IRS; the examination report remains subject to review under the Area Director's acceptance described in IRM 4.10.8.2.2.

How it is delivered and returned

The examiner sends Form 870 with the report and a transmittal letter that sets a response date. For partial agreements IRM 4.10.8.6.2.1 says the reports and Form 870 are provided “with a response due date (generally 15 days),” using Letter 1967 or Letter 1967-A. Sign and return the form to the examiner. If you will sign as the representative, review the acts your Form 2848 authorizes for those years before you do.

1. Reconcile every agreed adjustment on the Form 4549-A "Agreed" report to the deficiency on the Form 870.
2. Confirm the unagreed issues are excluded and will follow the unagreed route (30-day letter, protest, Appeals).
3. Check that the periods and penalties are correct and that any attached statements reflect the agreement.
4. Have the taxpayer (both spouses on a joint return) sign, or sign as representative only if your authorization covers it.
5. Return it by the response date and consider paying the agreed amount to stop interest.

What the IRS does with it

The agreed amount is assessed. For partial agreements, IRM 4.10.8.6.2.1 says to ensure the amounts on the Form 870 are assessed and then continue with unagreed procedures, and the partial assessment generally must be made before the case goes to Appeals or Technical Services.

Interest is the main financial effect. IRM 4.10.8.2.2: “Signing the 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 tracks IRC 6601(c), which suspends interest from the 31st day after the waiver is filed until notice and demand.

Signing does not close the door in either direction. The same subsection 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.” IRM 4.10.8.5 adds that these cases are “excepted” from the normal reopening criteria. An overassessment shown on an 870 is treated as a claim for refund, so a separate claim invitation is not needed (IRM 4.10.8.10.1).

Once assessed, the agreed tax goes to notice and demand and normal collection. Because the taxpayer waived the deficiency procedures for that amount, the Tax Court route is no longer available for it; a later dispute would go through audit reconsideration or a refund claim and suit after payment.

Common problems

• Signing an 870 that includes unagreed issues. The 870 in a partial agreement should show only the agreed deficiency.
• Assuming the exam is final. The IRS can still assert additional deficiencies, and the taxpayer can still ask for reconsideration.
• Assuming the statute is protected. Signing does not extend the ASED; the IRS needs a separate Form 872 for the unagreed issues if time is short.
• Only one spouse signs on a joint deficiency.
• Representative signing beyond the authority granted on the 2848.
• Not paying. The waiver stops interest only after 30 days and only until notice and demand; paying the agreed amount stops it entirely.

Questions practitioners ask