Tax Return Preparer Fraud and the Assessment Limitation Period

Abstract

Professor Camp’s thesis is that the section 6501(a) assessment limitation period represents a very strong public policy choice in favor of closure, far stronger than a typical statute of limitation. Accordingly, he believes the fraud exception should be read to refer to the taxpayer's fraud and not the fraud of a third party such as a return preparer. Part I reviews the statutory language and current judicial interpretation of section 6501(a). Part II reviews its legislative history to show how it has evolved into what is tantamount to a statute of repose. Part III reviews the history of the various fraud provisions to show how and when the section 6501(c) exception to the normal three year limitation period for fraudulent returns first arose in 1918. Putting those parts together shows, so Professor Camp believes, how the fraud exception historically has referred to fraud committed by the taxpayer liable for the tax.