Tax Court Upholds Extension of Statute of Limitations in Murrin v. Comm.


Tax Court Upholds Extension of Statute of Limitations in Murrin v. Comm.

Court Ruling in Murrin v. Comm. Highlights Impact of Tax Preparer Fraud on Statute of Limitations

In the case of Murrin v. Comm., TCM 2024-10, an audit was conducted on tax returns filed nearly two decades earlier, where fraudulent entries made by a tax professional, unknown to the taxpayer, kept the statute of limitations from expiring. The returns in question, prepared and filed by a tax professional from 1993 to 1999, contained inaccuracies unknown to the taxpayer.

When the IRS sent a deficiency notice in 2019, the taxpayer contended that the assessment was invalid due to the general three-year statute of limitations. Nevertheless, the Tax Court found against the taxpayer, referencing IRC §6501(c), clarifying that the statute’s extension does not solely depend on the taxpayer’s intent to evade tax through falsification of their own return. The fraudulent actions by the tax preparer alone were enough to extend the period indefinitely for the IRS to assess taxes. This decision was in line with the court’s earlier ruling in Allen v. Comm. (2007) 128 T.C. 37, reinforcing the principle that fraud by a tax preparer impacts the limitations period for tax assessments.

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