Robert J. Fedor, Esq., L.L.C.

Laws related to statutes on tax matters often unclear

Whether intentional or an honest oversight, filing inaccurate or fraudulent tax documents can have serious consequences. Individuals who underestimate income or fail to file at all are often plagued by feelings of paranoia. For those individuals who could potentially face criminal charges related to tax evasion or tax fraud, it's important to be informed about the statute of limitations for these types of tax crimes.

In most cases, the IRS has three years time in which to file an official tax audit to obtain detailed financial information from an individual taxpayer. However, in cases where the IRS believes an individual underestimated their income by more than 25 percent, the statute of limitations is six years.

As with most IRS tax matters, there are exceptions to the six-year statute rule and cases in which the IRS may request additional time to gather information. In order to extend the six-year statute, the IRS must request and gain the approval of the taxpayer. In most cases, it's advisable to comply with the IRS's requests, however, there may be times where doing so is not in an individual's best interest.

In addition to filing for an extension of the six-year statute, the IRS may also dispute the date from which the six-year statute should be calculated. For example, in one tax evasion case, the IRS contended the six-year statute started from the date the last alleged tax evasion activity took place. In this case, the taxpayer was accused of using nominee trusts to hide and funnel assets. He was subsequently charged and convicted on charges related to tax evasion.

As with most tax matters, those related to IRS statute of limitations are often complex. For individuals fearing prosecution related to tax crimes, it's wise to consult with an attorney who can provide confidential legal advice and guidance.

Source: Forbes, "How Far Back Can IRS Claim Tax Evasion Or Fraud? Timing Is Everything," Robert W. Wood, Oct. 13, 2013

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