Ridge L. Harlan and Marjory C. Harlan - Page 19




                                       - 19 -                                         
                 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            






Page:  Previous  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  28  Next

Last modified: May 25, 2011