CCA 200851071: Where the omission came from does not change the six-year period on a Form 1042

Plain-English summary

Three sentences pointing a colleague at a case and drawing one conclusion from it.

The ordinary period for assessing tax is three years from the return, but it doubles to six where the return omits a large enough amount. The question here concerned Form 1042, the annual return by which a withholding agent reports and pays over tax on United States source income paid to foreign persons. Whether the extended period reaches such a return, and whether it matters how the omission came to light or what kind of adjustment produced it, is what the writer was asked.

The answer is that the described situation seems to fall under a Tax Court decision the writer names, and that because no distinction of that sort is mentioned in the case, the source of the adjustment or of the discovered omission would be immaterial to the analysis. The reasoning is an argument from silence and the writer says so: the case draws no line between one origin of an omission and another, so no line should be drawn in applying it.

That is a sensible way to read a limitations provision. The extended period turns on what the return did or did not report, measured objectively against what should have been reported. How the Service later came to notice the gap, or which examination adjustment surfaced it, says nothing about the state of the return when it was filed. Reading an origin requirement into the provision would make the deadline depend on the history of the audit rather than on the document the deadline runs from.

The release is a quick reply, hedged twice over, saying the situation seems to fall under the case and that the writer believes the conclusion follows, and it closes by inviting a call. It contains no discussion of the case's facts, so a reader cannot tell from this document how close the analogy is.

A note on the citation. The release names Northern Indiana Public Service v. Commissioner and gives a volume and page in the Tax Court reports, with no year. The citation-checking tool was not available in this session, so it is reproduced exactly as the release gives it and has not been confirmed against court records here. A reader relying on it should check it independently.

This is a clean digital release rather than a scan, so no OCR correction was needed. Kept as released: the case name without "Co." and without a year; the hyphenated "6-year statute" in the subject line and body.

Ruling snapshot

• Question: Does the six-year assessment period apply to a Form 1042, and does the source of the adjustment or of the discovered omission matter?
• Outcome: Advice given. The situation seems to fall under Northern Indiana Public Service v. Commissioner, 101 T.C. 294. Since no such distinction is mentioned in the case, the writer believes the source of the adjustment or of the discovered omission is immaterial to whether the six-year period applies to a Form 1042.
• Key authorities: IRC section 6501(e); Northern Indiana Public Service v. Commissioner, 101 T.C. 294, cited without a year and not independently verified here.

Full text (IRS public release)

ID: CCA_2008091615370852 Number: 200851071
Office: -------------- Release Date: 12/19/2008

UILC: 6501.07-00

From: -----------------------
Sent: Tuesday, September 16, 2008 3:37:13 PM
To: ---------------
Cc: -------------------------
Subject: 6-year statute

The situation you described to me seems to fall under Northern Indiana Public Service v. Commissioner
101 T.C. 294. Seeing no distinction mentioned in the case, I believe the source of the adjustment or the
discovered omission would be immaterial to the analysis of whether the 6-year statute applies to Form
1042. Call me if you have any further questions.

Thanks.