Mary McNulty Quoted on Statute of Limitations Case Involving Fraudulent Intent

Posted by Mary McNulty  Mary McNulty was quoted in a Bloomberg BNA Daily Tax Report article (subscription required) about a July 29 opinion by the U.S. Court of Appeals for the Federal Circuit in BASR Partnership v. United States, No. 14-05037.  The Federal Circuit held that a tax shelter promoter’s fraudulent intent didn’t extend the statute of limitation for the IRS to assess taxes against the taxpayer.  A split panel of the U.S. Court of Appeals for the Federal Circuit ruled that a former Jenkens & Gilchrist attorney’s intent to evade taxes when he marketed a tax avoidance scheme to taxpayers didn’t suspend the three-year statute of limitations for assessment of additional tax against the taxpayer.  Section 6501(c)(1) of the Internal Revenue Code provides, “[i]n 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.”  The IRS conceded that the taxpayer did not have fraudulent intent.  Mary commented that “the decision clearly reached the correct result” because the “IRS shouldn’t be able to impute a third party’s fraudulent intent to a taxpayer to extend the statute of limitations.”If you have any questions about the implications of this case, please contact either Mary or any of the other Tax lawyers at Thompson & Knight.