As most taxpayers know, under Internal Revenue Code (Code) Section 6501(a), the Internal Revenue Service (IRS) generally has three years after a tax return is filed to assess any additional tax. However, Code Section 6501 provides several exceptions to this rule, including but not limited to the following.

  • False or fraudulent returns with the intent to evade tax (unlimited assessment period)
  • Willful attempt to defeat or evade tax (unlimited assessment period)
  • Failure to file a return (unlimited assessment period)
  • Extension by agreement (open-ended or for a specific period)
  • Adjustments for certain income and estate tax credits (separately provided in specific statutes)
  • Termination of private foundation status (unlimited assessment period)
  • Valuation of gifts of property (unlimited assessment period)
  • Listed transactions (assessment period remains open for one year after certain information is furnished)
  • Substantial omission of items (six-year assessment period)
  • Failure to include certain information on a personal holding company return (six-year assessment period)

If the IRS issues a notice of deficiency and the taxpayer files a petition in the Tax Court, the statute of limitations on assessment is extended until after the Tax Court’s decision becomes final. See Code Section 6503(a); see also Roberson and Spencer, “11th Circuit Allows Invalid Notice to Suspend Assessment Period,” 136 Tax Notes 709 (August 6, 2012).
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On September 29, 2017, Judge Mark Holmes of the United States Tax Court (Tax Court) issued an order in the estate tax valuation case brought by the Estate of Michael Jackson (the Estate). In the case, the Estate moved to strike the testimony of the Internal Revenue Service’s (IRS) valuation expert witness on the grounds