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As a general rule, the Commissioner must determine a
deficiency within 3 years after a return is filed. Sec. 6501(a).
The statute of limitations is suspended by respondent mailing the
notice of deficiency. Sec. 6503(a)(1). Here, respondent's notice
of deficiency was mailed to petitioners on August 26, 1993, more
than the 3 years after the returns were filed. However, section
6501(c)(1) provides an exception to the general rule. It permits
respondent to assess a deficiency at any time if the taxpayer files
a fraudulent return. Based on our holding that petitioner
fraudulently filed petitioners' Federal income tax returns for each
of the years under consideration, section 6501(c)(1) extends the
period of limitations for each year. Thus, the notice of
deficiency is timely.
To reflect the foregoing,
Decision will be entered
under Rule 155.
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