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Lev
Lev, Tax Advisor
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What is the statute of limitations for tax fraud and tax e

Resolved Question:

What is the statute of limitations for tax fraud and tax evasion?
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.

LEV :

Hi and welcome to Just Answer!
See US statute - Title 26 › Subtitle F › Chapter 66 › Subchapter A › § 6501 - http://www.law.cornell.edu/uscode/text/26/6501


(c)Exceptions
(1)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.


(2)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.

So far the statute of limitations on assessment is not applied in case of tax fraud and tax evasion.
Sorry if you expected differently.

LEV :

The statute of limitation on collection still will be the same - 10 years after assessment.

Customer:

No, I'm actually quite happy with your answer. Just to be sure I'm clear on it, you're saying there is no time limit for discovery or prosecution, if the fraud is intentional and the evasion is willful. Is that right?


 


Related questions -- If there's no time limit for discovery or prosecution, are banks required to keep records, indefinitely? If not, do cases eventually get too old to investigate (if bank records are required)? If there's a standard rule for banks to keep records, is it universal or does it differ country to country?


 


Thanks

LEV :

That is correct. The statute of limitations on assessment is not applied in case of tax fraud and tax evasion. That means - the IRS may assess additional tax liability ANY time.
There is no requirements to keep all documents indefinitely. There are practical recommendations for keeping documents - and as a results - there are some difficulties to investigate old documents. Correspondingly - the IRS might have difficulties to proof the tax fraud or the tax evasion.
The record retention is responsibility of the taxpayer - not the bank.
The IRS requires that you keep your records that support an item of income or deductions on a tax return until the period of limitations for that return runs out.
Banks follow record retention regulations of the state where they operate.

LEV :

Here is a sample retention schedule for banks - http://www.ffiec.gov/bsa_aml_infobase/pages_manual/OLM_116.htm
Please be aware that most banks have their own retention schedules which are longer then recommended.

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22615
Experience: Taxes, Immigration, Labor Relations
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