Statute of Limitations (SOL) - Assessments Flashcards
What is the general statute of limitations for assessing additional tax under IRC Sec. 6501(a)?
Generally, the IRS has 3 years from the filing of the return or the due date of the return, whichever is later, to assess additional tax.
What exceptions are there to the 3-year statute of limitations for assessment under IRC Sec. 6501?
Exceptions include a false or fraudulent return with the intent to evade tax, a substantial understatement of income tax (more than 25%), or if no return is filed.
What is the statute of limitations for assessing tax if the taxpayer files a false or fraudulent return with the intent to evade tax?
In the case of a false or fraudulent return with intent to evade tax, there is no statute of limitations for assessment (IRC Sec. 6501(c)(1)).
How does the statute of limitations for assessment extend in the case of a substantial understatement of income?
If the taxpayer omits more than 25% of the gross income stated in the return, the statute of limitations for assessment is extended to 6 years (IRC Sec. 6501(e)).
What is the impact of filing an amended return on the statute of limitations for assessment?
Filing an amended return does not generally extend the statute of limitations for assessment unless an agreement is made to extend it (IRC Sec. 6501(c)(7)).
What happens to the statute of limitations for assessment if the taxpayer fails to file a tax return?
If no return is filed, there is no statute of limitations, and the IRS can assess tax at any time (IRC Sec. 6501(c)(3)).
How does the signing of Form 872, Consent to Extend the Time to Assess Tax, affect the statute of limitations for assessment?
Form 872 extends the statute of limitations for assessment for the period agreed upon in the form (IRC Sec. 6501(c)(4)).
Can the taxpayer and the IRS agree to further extend the statute of limitations after initially extending it with Form 872?
Yes, the taxpayer and the IRS can agree to further extensions, subject to limitations in IRC Sec. 6501(c)(4).
What is the statute of limitations for assessment if the taxpayer files a claim for refund or credit relating to a bad debt or worthless security?
In the case of a claim relating to a bad debt or worthless security, the statute of limitations is extended to 7 years (IRC Sec. 6501(e)(3)).
What effect does an IRS John Doe summons have on the statute of limitations for assessment?
The issuance of a John Doe summons suspends the statute of limitations for assessment for the period beginning on the date of the summons and ending on the assessment date plus 1 year (IRC Sec. 6501(c)(8)).
