3rd Circuit Holds that Taxpayer Intent to Evade Taxes Not Necessary for the Indefinite Statute of Limitations to Apply

On August 18, 2025, the United States Court of Appeals for the Third Circuit published its opinion in Murrin v. Commissioner, No. 24-2037 (3d Cir. 2025). The case involves taxpayer Stephanie Murrin, who underpaid her federal income taxes from 1993 to 1999. The underpayments arose because her tax preparer, Duane Howell, inserted false and fraudulent entries on her returns with the intent to evade tax. Importantly, Murrin herself did not cause these false entries and had no intent to evade tax.  

More than 20 years later, in 2019, the IRS issued a notice of deficiency for the unpaid taxes from those years. While Murrin did not challenge the amount of tax owed, the accuracy-related penalty, or the interest, she argued that the IRS was barred from assessing the liability by the standard three-year statute of limitations.

The U.S. Tax Court disagreed, holding that the exception in Internal Revenue Code § 6501(c)(1) applied. That provision allows the IRS to assess tax “at any time” where a return is false or fraudulent with the intent to evade tax. The court emphasized that the exception applies even if the fraudulent intent rests with the tax preparer rather than the taxpayer herself. Murrin appealed, and the Circuit Court affirmed the ruling. It held that § 6501(c)(1) does not require the taxpayer to have personally acted with fraudulent intent. Instead, the statute applies whenever a return is prepared and filed with the intent to evade tax, regardless of whose intent it was. As a result, the IRS’s notice of deficiency was valid and not barred by the statute of limitations.

This case underscores the importance of taxpayers carefully reviewing their tax returns before filing. Even when errors or fraudulent entries are made solely by a preparer, the taxpayer remains responsible for the accuracy of the return and may face significant financial consequences years or even decades later.

For more information regarding this case, contact Liskow attorneys Caroline Lafourcade, and Kevin Naccari and visit our Tax practice page.