-7-
limitations period for assessing petitioner’s taxes is extended
if the taxes were understated due to fraud of the preparer.5
Limitations Period and Fraud Penalty
Petitioner argues that the limitations period is only
extended if the fraudulent intent is that of the taxpayer, not
the preparer. Petitioner relies on cases in which the fraud
penalty was asserted against the taxpayer and the limitations
period was extended. See, e.g., Rhone-Poulenc Surfactants &
Specialties, L.P. v. Commissioner, 114 T.C. 533, 548 (2000)
(citing Chin v. Commissioner, T.C. Memo. 1994-54 (regarding the
predecessor to section 6663); Williamson v. Commissioner, T.C.
Memo. 1993-246 (same); Richman v. Commissioner, T.C. Memo. 1993-
32 (same); Callahan v. Commissioner, T.C. Memo. 1992-132 (same)).
The cases petitioner cites are inapposite, however. Those cases
define fraud with reference to the taxpayer’s actions because it
was the taxpayer who committed the fraud. The cases did not hold
that fraud for purposes of section 6501(c)(1) is limited to the
fraud of the taxpayer. Nor do we read these cases to require
5Cases interpreting limitations periods in the Code have
extended them due to malfeasance of return preparers and other
third parties, not just taxpayers. See, e.g., Transpac Drilling
Venture 1983-2 v. United States, 83 F.3d 1410, 1414-1415 (Fed.
Cir. 1996) (extending limitations period for assessing taxes of
partners attributable to partnership items under sec. 6229(c)
where partner intended to evade taxes of other partners); Estate
of Upshaw v. Commissioner, 416 F.2d 737 (7th Cir. 1969)
(extending limitations period for assessment of taxes on joint
returns where only one spouse committed fraud), affg. T.C. Memo.
1968-123; United States v. McLean, 390 F. Supp. 2d 475 (D. Md.
2005) (extending erroneous refund limitations period in sec.
6532(b) where fraud committed by a person other than the
taxpayer); United States v. Southland Oil Co., 339 F. Supp. 2d
764 (S.D. Miss. 2004) (same).
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