An adjustment period, not an assessment statute
IRM 4.31.9.8.4.1 opens with the key distinction: “The statute of limitations under IRC 6235 is applicable to the time allowed to make partnership adjustments instead of time to assess.” The IRS makes the adjustment by issuing the FPA (or by agreement), and the IU is then assessed as a tax for the adjustment year under IRC 6232. Under the centralized regime the period is controlled at the partnership level, not partner by partner. On IRS systems the IRC 6235(a)(1) date generally matches the ASED field on AIMS, and the ASED is updated to alpha code AE once the NOPPA has been issued and the 6235(a)(1) date is within 90 days (IRM 4.31.13.5.1).
For the general assessment statute that applies to partners and other taxpayers, see the assessment statute of limitations.
The three dates in IRC 6235(a)
No adjustment may be made after the latest of three dates:
| Date | Rule | When it matters |
|---|---|---|
| IRC 6235(a)(1) | 3 years after the latest of the date the return was filed, the return due date (without extensions), or the date an AAR was filed | Deadline for the NOPPA (IRC 6231(b)(1)); the examiner's statute |
| IRC 6235(a)(2) | 270 days, plus any agreed extension under IRC 6225(c)(7), after everything required for a modification request is submitted | Only when modification is requested |
| IRC 6235(a)(3) | 330 days, plus any extension of the modification period, after the NOPPA | When a NOPPA was issued |
The IRM ties the first date to the NOPPA: “The notice of proposed partnership adjustment must be issued prior to the expiration of the IRC 6235(a)(1) date.” The later dates give the IRS time to evaluate modification and issue the FPA after a timely NOPPA. IRM 4.31.13.6 defines the FPA deadline as the later of the three. If the PR signs Form 8981 and the IRS countersigns it, the IRC 6235(a)(2) date is recomputed as the countersignature date plus 270 days (IRM 4.31.13.5.1).
An illustration of the arithmetic: a calendar-year partnership files its 2022 return on September 15, 2023 after an extension. The (a)(1) date is three years after the later of filing or the March 15, 2023 due date, so September 15, 2026, unless an AAR or Form 872-M moves it. If the NOPPA issues on June 1, 2026 and no modification is requested, the (a)(3) date is 330 days after June 1, 2026.
What starts or restarts the period
- AAR. “The filing of a valid AAR will extend the IRC 6235(a)(1) statute date to the date which is 3 years from the date the AAR was filed.” A subsequent filing that is not a valid AAR does not (IRM 4.31.9.7.7). Examiners must make a mandatory referral to the BBA point of contact before updating the date for any subsequent filing.
- Late return. For a delinquent return secured by examination, “Update the IRC 6235(a)(1) date to 3 years from the date that the delinquent return was received.” (IRM 4.31.9.3.1).
- Invalid election out. When the IRS determines an election out is invalid, the IRC 6235(a)(1) date is set to 3 years after the Form 1065 filing date (IRM 4.31.9.7.4.3).
- Bankruptcy. IRC 6241(6) suspends the adjustment period while the IRS is barred by a title 11 case, plus 60 days.
Special rules: fraud, no return, omission
| Situation | Period | Source |
|---|---|---|
| False or fraudulent partnership return with intent to evade tax | Any time | IRC 6235(c)(1) |
| Substantial omission described in IRC 6501(e)(1)(A) or (C) | 6 years instead of 3 | IRC 6235(c)(2) |
| No partnership return filed | Any time | IRC 6235(c)(3) |
| Return prepared by the IRS under IRC 6020(b) | Not treated as a return of the partnership | IRC 6235(c)(4) |
| Unreported information under IRC 6501(c)(8) | Not before the IRC 6501(c)(8) date | IRC 6235(c)(5) |
| Undisclosed listed transaction under IRC 6501(c)(10) | Not before the IRC 6501(c)(10) date | IRC 6235(c)(6) |
Because a substitute for return is not the partnership's return, an SFR does not start the period. IRC 6235(a) is also subject to section 905(c), which coordinates foreign tax redeterminations.
Extending with Form 872-M
IRC 6235(b) allows the IRS and the partnership to extend the period by agreement before it expires. The form is Form 872-M, Consent to Extend the Time to Make Partnership Adjustments, sent with Letter 907-M. The IRM rules:
- Which date. Form 872-M can extend the (a)(1), (a)(2) or (a)(3) date, chosen from a drop-down. Field examiners extend (a)(1). The (a)(2) date can be extended only after a NOPPA and a modification request, and (a)(3) only after a NOPPA, generally by BBA Operations or Technical Services (IRM 4.31.9.8.4.3).
- One year per form. One Form 872-M for each tax year, because each year may have a different PR.
- Who signs. The PR, or the DI for an entity PR, signs before the date expires, and a manager countersigns before expiration. “The Power of Attorney (POA) should not sign the extension.” If anyone other than the PR or DI signs, the examiner must get Counsel approval before countersigning, and must confirm an entity PR still exists when its DI signs.
- Notice of rights. Letter 907-M and Form 872-M include a notification of rights, and the examiner explains the partnership's options. “Do not include Pub 1035, Extending the Tax Assessment Period, when soliciting statute extensions for BBA partnerships.” Pub 1035 does not address IRC 6235.
- Restricted consents. Available with IRS agreement and Counsel approval under IRM 25.6.22.8. Any restrictive language added by the partnership requires Counsel consultation before countersignature.
- Delivery. Faxed forms need an original signature; email and secure messaging can carry digital signatures. A signed form may not be altered by the IRS.
Form 872-M is the partnership-level counterpart of the forms covered on Form 872 statute extensions. A refusal to extend has consequences: “If the partnership refuses to extend the IRC 6235(a)(1) statute, the examiner needs to begin the process of closing the examination.” (IRM 4.31.9.8.4.2). A case with too little time cannot go to Appeals.
How the IRS manages the period
The IRM builds in margins. “An exam shouldn’t be initiated with less than 12 months remaining on the statute of limitations (SOL) on making adjustments under IRC 6235(a)(1) without first securing written managerial approval.” Then: “The examiner should request an extension if the IRC 6235(a)(1) statute will expire within 14 months presuming the case is not a no-change.” The summary report is due no later than 14 months before the (a)(1) date, and the case must reach Technical Services with 12 months left (18 months if going to Appeals). Appeals' own rule: “In general, all non-docketed BBA cases received by Appeals must have at least 365 days remaining on the statute of limitations.” Cases with less time follow imminent statute procedures (IRM 4.31.9.11.6).
For practitioners, these margins explain the timing of Form 872-M requests and why a refusal can mean the case closes to Technical Services for a NOPPA without Appeals consideration.
Other periods that matter
| Period | Rule | Source |
|---|---|---|
| Partner chapter 2 and 2A tax | Assessment period stays open until 1 year after a court decision becomes final, or 1 year and 90 days after the FPA is mailed | IRC 6501(c)(12); IRM 4.31.9.6.1 |
| Pass-through partner's share of an IU | Form 8985 is treated as a return for IRC 6501(a); if no Form 8985 is filed, there is no limitation period for its share | IRM 4.31.13.5.1 |
| Assessment of partners under IRC 6232(f) | 2 years after notice and demand to the partnership | IRC 6232(f)(6)(B) |
| Modification amended returns | IRC 6501 and 6511 do not apply | IRC 6225(c)(2)(D) |
| Collection after bankruptcy | Suspended during the bar plus 6 months | IRC 6241(6)(A)(ii) |
The partners' own statutes are separate. The IRM reminds examiners that “Partner statutes for assessment of Ch 2/2A SECA/NIIT taxes are not controlled by BBA IRC 6235(a) statutes.” When an examiner controls a partner's return for non-pass-through issues, the examiner protects that partner's IRC 6501(a) period with the appropriate version of Form 872, and a partner whose only issue is net investment income tax or self-employment coverage still needs that protection (IRM 4.31.9.6.4 and 4.31.9.6.5). For chapter 3 and 4 withholding tied to a partnership adjustment, IRC 6241(9)(B) determines the tax with respect to the reviewed year but imposes it with respect to the adjustment year.
The IRM states the pass-through rule bluntly: “If the PTP does not file a Form 8985, there is no statute of limitations to assess its portion of the IU.” See tiered partnerships and collection and partner liability.
Questions practitioners ask
Does the IRS have to assess the imputed underpayment within the IRC 6235 period?
IRC 6235 limits when the partnership adjustment can be made, which happens through the FPA or an agreement. Assessment then follows under IRC 6232 after the 90-day petition period or a final court decision. The IRM describes 6235 as a time to make adjustments instead of time to assess.
Does an AAR give the IRS more time?
Yes. A valid AAR moves the IRC 6235(a)(1) date to 3 years after the AAR is filed. Only a valid AAR does this; other subsequent filings do not.
Can our firm sign Form 872-M as power of attorney?
The IRM says the POA should not sign and the form has no POA signature line. The PR or the DI for an entity PR signs. If anyone else signs, the examiner must get Counsel approval before countersigning.
What if the partnership never filed a return?
The adjustment may be made at any time under IRC 6235(c)(3), and a substitute for return prepared by the IRS is not treated as the partnership's return.
Is Pub 1035 included with a BBA extension request?
No. The IRM tells examiners not to include Pub 1035 because it does not address IRC 6235. Letter 907-M and Form 872-M carry the notice of rights.