IRSTaxes

Tax lessons about statute of limitations

The recently issued court opinion in Finnegan v. Commissioner, No. 17-10676 (11th Cir. 2019) emphasizes two points for taxpayers:

  1. Intentional fraud by the tax preparer can extend and hold open the statute of limitations.
  2. If a taxpayer wants to make an argument about statute of limitations, it should be raised at tax court, not in appeals. This is the case even if the statutory period has not yet expired at the time of filing the tax court action.

Overall and in general, when considered in combination with other common tax procedure actions, we find that the statute of limitations provision is seldom valuable to a taxpayer with an identified tax debt. In other words, it is better to work it out than wait it out.

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