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Section 275. Period for assessment and collection. The
present law limits the time for assessments to 2 years from
the date the return is filed. Experience has shown that
this period is too short in a substantial number of large
cases, resulting oftentimes in hastily prepared
determinations with the result that additional burdens are
thrown upon taxpayers in getting ill-advised assessments
removed. In other cases, revenue is lost by reason of the
fact that sufficient time is not allowed for disclosure of
all the facts. Subsection (a), therefore, increases the
period of 2 years to 3 years.
* * * * * * *
Section 276(a). No return or false return. The present
law permits the Government to assess the tax without regard
to the statute of limitations in case of failure to file a
return or in case of a fraudulent return. The change in
this section continues this policy, but enlarges the scope
of this provision to include cases wherein the taxpayer
understates gross income on his return by an amount which is
in excess of 25 percent of the gross income stated in the
return. It is not believed that taxpayers who are so
negligent as to leave out of their returns items of such
magnitude should be accorded the privilege of pleading the
bar of the statute.
The House passed the following statutory language:
SEC. 276. SAME--EXCEPTIONS.
(a) No Return or False Return.--If the taxpayer fails
to file a return, or files a false or fraudulent return with
intent to evade tax, or omits from gross income an amount
properly includible therein which is in excess of 25 per
centum of the amount of gross income stated in the return,
the tax may be assessed, or a proceeding in court for the
collection of such tax may be begun without assessment, at
any time. [Emphasis added.]
In the Senate, the Finance Committee changed the approach,
explaining in the report as follows (S. Rept. 73-558, pp. 43-44
(1934), 1939-1 C.B. (Part 2) 586, 619-620):
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