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Who is authorized to sign a corporate return?

Sec. 6062 generally provides that a corporation's income tax return must be signed by the president, vice-president, treasurer, assistant treasurer, chief accounting officer or any other officer duly authorized au·thor·ize  
tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es
1. To grant authority or power to.

2. To give permission for; sanction:
 to sign; the fact that an individual's name is signed on the return is prima facie evidence prima facie evidence
n. Law
Evidence that would, if uncontested, establish a fact or raise a presumption of a fact.
 that the individual has such authority.

However, Sec. 6062 leaves at least three important issues unresolved. First, what procedures must a corporation follow to authorize To empower another with the legal right to perform an action.

The Constitution authorizes Congress to regulate interstate commerce.

authorize v. to officially empower someone to act. (See: authority)
 an officer other than the specified five officers (an "unspecified Adj. 1. unspecified - not stated explicitly or in detail; "threatened unspecified reprisals"
specified - clearly and explicitly stated; "meals are at specified times"
 officer") to sign the return? Second, can a representative of a U.S. corporation sign its return under a power of attorney? Third, when a corporation ceases to exist as the result of a merger, who can sign the corporation's return for the tax year resulting from the merger (or any other unfiled returns)?

Signature Authority

There are no set rules that a corporation must follow in authorizing an unspecified officer to sign a return. However, if an officer who intends to sign a return is not one of the specified officers, his signature authority should be clearly evident. The best way to document such a grant of authority is to have it appear in the by-laws or resolutions of a corporation's board of directors. Signature authority can be granted only to an officer, and not, for example, to a nonofficer tax director.

Power of Attorney

A representative of a U.S. corporation cannot sign its return under a power of attorney. Regs. Sec. 1.6012-1(a)(5) provides that an individual's tax return may be signed by an agent under certain specific circumstances. Regs. Sec. 1.6012-2, which deals with corporate returns, does not contain similar provisions.

The instructions to Form 1120 reiterate re·it·er·ate  
tr.v. re·it·er·at·ed, re·it·er·at·ing, re·it·er·ates
To say or do again or repeatedly. See Synonyms at repeat.

 the Code requirement that the return must be signed by a corporate officer. In addition, the instructions to Form 2848, Power of Attorney (and Declaration of Representative), state that a representative may be authorized to sign an income tax return only if the requirements of Regs. Sec. 1.6012-1 (a)(5) are satisfied; as noted, however, that provision only applies to returns of individuals. Regs. Sec. 1.6012-2(g)(3), however, does permit a responsible representative or agent of a foreign corporation within the U.S. to sign the foreign corporation's return.

Effect of a Merger

There appears to be little, if any, authority directly addressing the issue of who can sign an income tax return of a corporation that has been merged out of existence for the tax year resulting from the merger (or any other unfiled returns). Therefore, it is necessary to look to IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws.  guidance in analogous situations, such as the signing of statute extension agreements and refund claims.

Rev. Rul. 59-399 addressed the situation in which two or more corporations merged under state law, with fusion of assets and liabilities, so that the resulting corporation became in effect the same taxable entity as its absorbed constituents. In that situation, a Form 872, Consent to Extend the Time to Assess Tax, executed by the resulting corporation on behalf of an absorbed constituent, was a valid agreement to extend the time for assessment under Sec. 276(b) of the 1939 Code (a predecessor of current Sec. 6501); see also GCM GCM General Circulation Model
GCM Global Climate Model
GCM General Court-Martial
GCM Galois/Counter Mode (cryptography)
GCM Geriatric Care Managers
GCM Global Circulation Model
GCM Good Conduct Medal
 34970, concluding that for a merger or consolidation under state law, the government may obtain a Form 872 executed by the surviving or resulting corporation to extend the period of limitations for assessment of the constituent corporations' tax liabilities and send it a notice of primary liability for such taxes.

Similarly, Rev. Rul. 54-17 held that a claim for refund should be executed by the successor corporation in the name of (and on behalf of) the corporation liquidated DAMAGES, LIQUIDATED, contracts. When the parties to a contract stipulate for the payment of a certain sum, as a satisfaction fixed and agreed upon by them, for the not doing of certain things particularly mentioned in the agreement, the sum so fixed upon is called liquidated damages. (q.v.  by merger. This issue was also considered by the IRS in Letter Ruling (TAM) 8006011, which held that a successor corporation had the authority to sign Forms 870-C, Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of Overassessments, as a successor-in-interest to three corporations that had been merged into it.

Additional support for the conclusion that officers of the successor corporation are the appropriate signatories on returns after a merger is found in Union Texas International Corp., 110 TC 321 (1998). In that case, the Tax. Court held that the successor corporation was equitably estopped to deny the validity of consents signed by officers of the predecessor corporation after the merger was consummated and the predecessor corporation was dissolved. Because the officers of the predecessor corporation were aware of their lack of authority while the Service was not, the Tax Court held for the IRS based on equitable estoppel equitable estoppel n. where a court will not grant a judgment or other legal relief to a party who has not acted fairly; for example, by having made false representations or concealing material facts from the other party.  grounds. Thus, the court's reliance on estoppel A legal principle that bars a party from denying or alleging a certain fact owing to that party's previous conduct, allegation, or denial.

The rationale behind estoppel is to prevent injustice owing to inconsistency or Fraud.
 indicates that it believed that the consents signed by the predecessor corporation's officers were legally invalid.

Based on the foregoing, when a corporation (1) is merged with or into another corporation (with the other corporation surviving) or (2) is one of two or more corporations that merge to form a new corporation, an officer of the surviving or resulting corporation appears to be the proper person to sign the income tax return of the merged corporation for the tax year resulting from the merger (or any other unfiled returns). The signature should be formatted as follows: "John Smith, President, XYZ XYZ  
interj. Informal
Used to indicate to someone that the zipper of his or her pants is open.

[ex(amine) y(our) z(ipper).]
 Corporation, Successor-in-Interest by Merger to ABC ABC
 in full American Broadcasting Co.

Major U.S. television network. It began when the expanding national radio network NBC split into the separate Red and Blue networks in 1928.

In this example, Mr. Smith may have limited knowledge of ABC's tax liability and thus be hesitant hes·i·tant  
Inclined or tending to hesitate.

hesi·tant·ly adv.
 to sign its return. Nevertheless, Mr. Smith (or another authorized XYZ officer) must sign the return, not one of ABC's former officers. At the same time, ABC's participation in (or supervision of) the return's preparation may be both necessary and appropriate.

FROM RUTH PEREZ,J.D., AND MICHAEL A. URBAN,J.D., MLT (MultiLink Trunking) See port aggregation. , WASHINGTON, DC
COPYRIGHT 1999 American Institute of CPA's
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1999, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Author:Urban, Michael A.
Publication:The Tax Adviser
Geographic Code:1USA
Date:Jul 1, 1999
Previous Article:Recent information reporting developments.
Next Article:S corp. relief.

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