Frank H. and Marla C. Black - Page 17
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1. Period of Limitations and Fraud
We address the issues of fraud and the period of limitations
prior to the other issues in the instant case because, absent
fraud, the period of limitations prevents respondent’s assessment
of the taxable years in issue. Sec. 6501(c)(1); see, e.g.
Langworthy v. Commissioner, T.C. Memo. 1998-218. The notice of
deficiency was issued on June 9, 2004, after the expiration of
the general 3-year period of limitations on assessments for both
petitioners’ 1991 and 1992 taxable years. Sec. 6501(a).
However, in the case of the filing of a false or fraudulent
return with intent to evade tax, the tax may be assessed at any
time. Sec. 6501(c)(1). If the return is fraudulent in any
respect, it deprives the taxpayer of the bar of the statute of
limitations for that year. Lowy v. Commissioner, 288 F.2d 517,
520 (2d Cir. 1961), affg. T.C. Memo. 1960-32. “Thus, where fraud
is alleged and proven, respondent is free to determine a
deficiency with respect to all items for the particular taxable
year without regard to the period of limitations.” Colestock v.
Commissioner, 102 T.C. 380, 385 (1994). Moreover, if a joint
return was filed, proof of the fraudulent intent as to one spouse
lifts the bar of the statute of limitations as to both spouses.
Vannaman v. Commissioner, 54 T.C. 1011, 1018 (1970).
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Last modified: March 27, 2008