Does the IRS Always Have Forever?
No. Whether or not the IRS can enforce the forever statute for civil tax fraud depends on various factors.
If the matter is appealed or brought to the U.S. Court of Claims, not all courts agree as to whether the IRS may be able to enforce the civil fraud statute forever, and there are some limitations depending on who committed the fraud, when the fraud commenced (and ended), and what happened in the interim.
Three Main IRS “Forever Statute” Situations to be aware of
When it comes to tax, the main exceptions to the 3- or 6-year SOL is codified in 26 U.S. Code § 6501 – Limitations on assessment and collection are:
False Return
In the case of a false or fraudulent return with the intent to evade tax, the tax may be assessed, or a proceeding in court for collection of such tax may be begun without assessment, at any time.
Willful Attempt To Evade Tax
In case of a willful attempt in any manner to defeat or evade tax imposed by this title (other than tax imposed by subtitle A or B), the tax may be assessed, or a proceeding in court for the collection of such tax may be begun without assessment, at any time.
No Return
In the case of failure to file a 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.
Since the IRS does not define Civil Tax Fraud, you should review the IRM (Internal Revenue Manual) for assistance. The requisite sections of the manual have been reproduced below.
Definition of Fraud
Fraud is deception by misrepresentation of material facts, or silence when good faith requires expression, which results in material damage to one who relies on it and has the right to rely on it. Simply stated, it is obtaining something of value from someone else through deceit.
Tax fraud is often defined as an intentional wrongdoing, on the part of a taxpayer, with the specific purpose of evading a tax known or believed to be owing. Tax fraud requires both:
- A tax due and owing; and
- Fraudulent intent.