The September-October 2015 edition of the Hillsborough County Bar Association’s Lawyer magazine includes an article entitled “The Never-Ending Story – Civil and Criminal Statutes of Limitations for Tax Fraud” written by Wiand Guerra King attorney Matthew J. Mueller. Discussed in further detail in the article, the IRS may have three years, six years, or forever to assess a tax liability, along with corresponding penalties and interest, depending on the circumstances. Additionally, the threat of a criminal tax prosecution can persist for at least six years after a person files their tax return; and even longer in some cases.
Following submission of the article, a divided panel of the U.S. Court of Appeals for the Federal Circuit held in BASR Partnership v. United States, No. 2014-5037, that the unlimited civil statute of limitations for assessment should only apply where the government can demonstrate that the taxpayer possessed the intent to evade a tax. The government took the broad position, unsuccessfully in BASR Partnership but successfully in other cases in other venues discussed in the article, that the unlimited statute of limitations for assessment should apply if the tax return at issue was fraudulent and a third party acted with the intent to evade a tax—even if the taxpayer was unaware of the fraud.