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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 contesting ill-advised assessments.
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.
* * * * * * *
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 House bill 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. Your committee is in general accord with the policy
expressed in this section of the House bill. However, it is
believed that in the case of a taxpayer who makes an honest
mistake, it would be unfair to keep the statute open
indefinitely. For instance, a case might arise where a
taxpayer failed to report a dividend because he was
erroneously advised by the officers of the corporation that
it was paid out of capital or he might report as income for
one year an item of income which properly belonged in
another year. Accordingly, your committee has provided for
a 5-year statute in such cases. This amendment also
necessitates a change in section 276(a) of the bill.
Section 276(a). False return or no return
This section is explained in connection with the change
in section 275.
Although the Finance Committee’s rationale was different
from that of the Ways and Means Committee, the Finance
Committee’s statutory language describing the omission that would
trigger a 5-year limitation period (sec. 275(c)) was the same as
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