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Can I Avoid the 6 Year Tax Assessment Statute By Filing a More Accurate Amended Return?

In a recently issued Chief Counsel Advice (CCA 201118020), the IRS addressed the issue of whether a taxpayer who omits over 25% of gross income on the original tax return, but then files an amended return showing additional income (putting the omission, if any, below 25%) within 3 years, precludes the IRS from assessing the income tax liability over the original 6 year statute of limitation period.
Before addressing CCA 201118020, we should remind ourselves of the general statutes of limitation governing the assessment of tax liability. Under IRC Section 6501(a) , a valid assessment of income tax liability generally may not be made more than 3 years after the later of: (a) the date the tax return was filed or (b) the due date of the tax return. However, under IRC Section 6501(e) , a severe 6-year limitations period applies when a taxpayer non-fraudulently omits from gross income an amount that is greater than 25% of the amount of gross income stated in the return.
In CCA 201008020, the Chief Counsel addressed a scenario where a taxpayer omitted greater than 25% of the amount of gross income stated in the return, subjecting him to the 6 year statute; but within the first 3 years thereafter the taxpayer amended his return so that he had no longer omitted greater than 25% of the gross income. Should the original 6 year IRC Section 6501(e) statue still apply, or is the 3 year IRC Section 6501(a) statute now applicable? The answer is, unfortunately, the 6 year statute continues to apply. The CCA concludes that the filing of an amended return showing additional income doesn’t preclude the IRS from applying IRC Section 6501(e)’s 6-year period. However, the CCA emphasized that the IRS should assess additional tax and issue deficiency notices within IRC Section 6501(a)’s 3-year period whenever possible, even if it determines that the 6-year period applies.