CCA 200851067: Whoever may sign the plan's return is the one who may sign the consent

Plain-English summary

An examiner asked who has authority to sign a consent extending the time to assess tax arising from an employee plan, in a case that appears to involve revoking the plan's qualified status. The answer runs through one governing principle and then stops at the edge of what the writer is willing to say.

The principle is borrowed from return signing. A consent to extend the assessment period, made on Form 872 or the open-ended Form 872-A, has to be executed by someone who can bind the taxpayer, and the Service treats that question as the same question as who signs the taxpayer's original return. Revenue Ruling 83-41 states this directly, and the writer quotes it: the rules applicable to the execution of the original returns generally apply to consents. So whoever is authorized to sign the plan's annual returns, the Form 5500 series and Schedule P, is the proper person to sign the Form 872, including the taxpayer's agent or a fiduciary such as a trustee. The writer adds the qualifier that matters in practice: the relevant taxpayer is the one under examination and against whom the tax would be assessed, not whoever happens to be nearest the paperwork.

The Internal Revenue Manual is quoted at length to show how that plays out. IRM 25.6.22 is the chapter on consents, and 25.6.22.6.13 deals with employee plans. The consent for the section 4975(a) excise tax on a prohibited transaction must come from the person on whom the tax is imposed, even though the limitations period itself runs from the Form 5500 filing. Where a Form 5500 is filed by the employer or the plan administrator, one of them signs. Where a Schedule P is filed with it, the trustee has signed a jurat adopting the Form 5500 information as the trust's return information, and the consent for the trust must therefore be signed by the trustee. The writer presumes the same principles carry over from excise tax to income tax, and flags that as a presumption.

A 1998 field service advice is offered as background, described as neither authoritative nor precedential. It concerned Forms 872 signed by an assistant treasurer for a corporate employer, covering income and section 4975(a) excise taxes on a retirement plan and a 401(k) plan whose returns went in on Schedule P. The consents were held ineffective, because the treasurer was not a trust fiduciary and so was not the person with authority to sign the Schedule P. The point carries: a senior corporate officer is not automatically the right signer.

On the specific question, whether a sponsoring and participating employer in a multiple-employer plan can sign an effective consent by virtue of that status, the writer is inclined to think not, and says the plan administrator or trustee must consent. But the hedging is unusually candid. The writer says they do not know enough about employee plans, the filing requirements, or the facts to be sure whether a sponsoring employer might in some multiple-employer arrangements sign and file the plan's returns. The Form 5500 has separate signature spaces for an employer or plan sponsor and for an administrator, and the instructions are described as giving no real clarity beyond stating that participating employers do not file individually for these plans. So the release closes on the basics rather than the specifics: a consent for taxpayer X should be signed by whoever has authority to sign returns for X, with an offer to discuss further.

Note that the release reproduces a commercial reporter number for the 1998 advice. It is kept because the release contains it; this corpus does not source from such publishers and the number was not followed.

This is a clean digital release rather than a scan, so no OCR correction was needed. Kept as released: the shorthand "w/" and "t/p"; "employees-retirement plan"; "the treasurer" in the summary of the 1998 advice where the signer is elsewhere described as an assistant treasurer; and the double hyphens in "multiple-employer plan--the sponsor, I suppose--signs".

Ruling snapshot

• Question: Who is authorized to sign a consent extending the period to assess tax on an employee plan, and can a sponsoring participating employer in a multiple-employer plan do so by virtue of that status?
• Outcome: Advice given, expressly limited. Authority to sign a consent follows authority to sign the plan's returns, per Rev. Rul. 83-41: the employer or plan administrator signs for the Form 5500, and the trustee signs the consent for the trust where a Schedule P is filed. On the multiple-employer question the writer is inclined to think the answer is no and that the plan administrator or trustee must consent, while stating they lack sufficient knowledge of the plan and the facts to be definitive. The definitive statement is limited to the basics: a consent for taxpayer X should be signed by whoever has authority to sign returns for X.
• Key authorities: IRC sections 6501 and 4975(a); Rev. Rul. 83-41, 1983-1 C.B. 349; IRM 25.6.22 and 25.6.22.6.13; Forms 872, 872-A, 5500 and Schedule P; an unidentified 1998 field service advice, described in the release as not authoritative or precedential.

Full text (IRS public release)

ID: CCA_2008092417511118 Number: 200851067
Office: ------------- Release Date: 12/19/2008

UILC: 6501.08-00, 6501.08-08

From: --------------------
Sent: Wednesday, September 24, 2008 5:51:12 PM
To: ------------------
Cc: ----------------------------------------
Subject: FW: Your views on plan revocation

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In response to your first question, the rule on who is authorized to sign a consent to extend the time to assess tax on an employee plan is directly tied to who is authorized to sign the plan's returns. See Rev. Rul. 83-41, 1983-1 C.B. 349 (providing that "the Service will generally apply the rules applicable to the execution of the original returns to consents to the extension of time to make an assessment"). Therefore, whoever is authorized to sign the annual returns (e.g., Forms 5500, Schedule P (Form 5500)) of the relevant taxpayer, including the taxpayer's agent, or a fiduciary of the t/p, such as a trustee, is the proper person to sign the Form 872. By relevant taxpayer, I mean the one under examination and against whom the tax would be assessed.

IRM 25.6.22 is the chapter devoted to consents to extend the assessment period, and IRM 25.6.22.6.13 explains in some detail consents w/ respect to employee plans. It reads:

(1) Form 872 or 872–A is used to extend the statute for assessment of taxes under Chapter 43 (Qualified Pension, Etc., Plans) of the Code.

(2) The statutory period for assessment of the IRC § 4975(a) excise tax on a disqualified person may be extended when necessary by securing an executed Form 872 or 872–A for each year in which transactions occur that give rise to the excise tax. The consent must always be obtained from the person upon whom the tax is imposed, even though the period of limitations is determined by the due date of the annual return (Form 5500 series) or the date the return is filed, whichever is later.

(4) Form 5500 is filed by the employer maintaining the plan or the plan administrator and the consent must be signed by the employer or plan administrator. If Schedule P (Annual Return of Fiduciary of Employer Benefit Trust) is filed with the Form 5500, the Schedule P is a jurat signed by a plan trustee and filed by the employer or the plan administrator that allows the trustee under penalties of perjury to treat the information in the Form 5500 as the trustee’s return information. The consent for the trust must be signed by the trustee.

Presumably, the same principles apply for a consent to extend income, as opposed to excise, taxes. While it's not authoritative or precedential, there may be some informational value to you in looking at a 1998 FSA (1998 WL 1984762) concerning the effectiveness of Forms 872 signed by an assistant treasurer on behalf of a corporate employer purporting to extend the assessment periods for income and section 4975(a) excise taxes on an employees-retirement plan and 401(k) plan. The applicable returns were filed on Schedule P of the Form 5500. The conclusion of the FSA was that the Forms 872 were ineffective because the treasurer was not a trust fiduciary and hence not the person w/ authority to sign the schedule P.

As to the particular question of whether a sponsoring (and participating) employer in a multiple-employer plan may, by virtue of that status, execute a consent that would be effective for the assessment of taxes resulting from the disqualification of the plan, I'm inclined to think the answer is no given the above. In other words, for a multiple- employer plan, the plan administrator (or the trustee, as applicable) must consent. It would seem to me that for a one-employer plan, by contrast, the employer that maintains the plan--the sponsor, I suppose--signs and files the annual returns for the plan and would thus be the one to sign a consent. But I also recognize that I don't know enough about employee plans generally, the filing requirements they're subject to, and the facts of your case to know whether a sponsoring employer can in certain multiple- employer situations sign and file the plan's returns or, even if they can, whether that's the situation here. I noticed that the Form 5500 has a space for an "employer/plan sponsor" to sign, as well as a space for an administrator to sign. The form instructions unfortunately don't provide any real clarity as to who signs under what circumstances, except to say at one point, that for multiple-employer plans, "Participating employers do not file individually for these plans."

So, I'll limit anything definitive to the basics: if the consent is for (hypothetical) taxpayer X, it should be signed by whoever has the authority to sign returns for X. That may be adequate for your purposes. Otherwise, please contact me, and we can discuss further.