CCA 200851093: Part II of a Form 870-LT is a separate document and binds like a closing agreement

Plain-English summary

Three sentences on the legal weight of half a form, agreeing with a position the recipient had already put forward.

Form 870-LT is the settlement vehicle in unified partnership proceedings, and it does two different jobs in two parts. Part I is a waiver of the restrictions on assessment, which lets the Service assess the partnership items and affected items without waiting out the notice procedures. A waiver of that kind speeds up assessment but does not itself settle anything, and it can generally be walked back from in the sense that it commits the taxpayer to nothing about the merits. Part II is the settlement: the partner's agreement to the treatment of the partnership items, which under section 6224(c) binds both the partner and the Service.

The advice makes three points about Part II. It constitutes a separate legal document from Part I. It is separately executed from Part I. And it has all the necessary references an assessment waiver needs, and is as binding as a closing agreement.

The comparison to a closing agreement is the substance of the answer. A closing agreement under section 7121 is final, reopenable only for fraud, malfeasance or misrepresentation of a material fact, and that finality is the strongest commitment the Code offers outside a court judgment. Saying Part II is as binding places the executed settlement on that footing, which means a partner who signs it cannot later relitigate the items it covers, and neither can the Service.

Treating the two parts as separate documents matters in practice. A taxpayer cannot sign Part II while arguing that its effect is somehow qualified by Part I, and a defect in the execution of one part does not automatically carry over to the other. Each part stands or falls on its own signature.

CCA 0851095, released in the same batch, covers the closing agreement side of this comparison and the distinction between a Form 866 resolving a period and a Form 906 resolving specific issues.

The release is a reply rather than a standalone analysis. It opens with "I agree," so the reasoning it endorses is not in the document, and it cites no authority for its conclusion.

This is a clean digital release rather than a scan, so no OCR correction was needed. Kept as released: "It has all the necessary references an assessment waivers needed," with the plural and tense as they appear; and the subject line "RE: question."

Ruling snapshot

• Question: Is Part II of a Form 870-LT a separate, binding legal document?
• Outcome: Advice given, in agreement with the position put to the writer. Part II constitutes a separate legal document from Part I, is separately executed, has all the references an assessment waiver needs, and is as binding as a closing agreement.
• Key authorities: IRC section 6224(c); Form 870-LT, Parts I and II. The release cites no authority for the conclusion.

Full text (IRS public release)

ID: CCA-919855-08 Number: 200851093
Office: -------------- Release Date: 12/19/2008

UILC: 6224.01-01

From: -------------------
Sent: Fri 9/19/2008 8:55 AM
To: -----------------
Cc: ---------------------
Subject: RE: question

I agree. Part II of the Form 870-LT constitutes a separate legal document from Part I and is separately
executed from Part I. It has all the necessary references an assessment waivers needed, and is as
binding as a closing agreement.