IRS Can Pursue Taxes In Decades-Old Fraud Case 3rd Circ. Says

In a significant ruling handed down on August 18, 2025, the U.S. Court of Appeals for the Third Circuit confirmed the IRS’s authority to pursue unpaid taxes decades after the original return, if the fraud that led to a tax underpayment was committed by the taxpayer’s return preparer. This decision emerged from the closely watched case of Murrin v. Commissioner, case number 24-2037.

Stephanie Murrin, the appellant, found herself at the center of a long-running tax dispute due to errors on her old tax returns. These errors, the IRS contended, arose from fraudulent actions by her tax preparer. Notably, there was no claim that Murrin herself intended to evade taxes; the fraud was attributed solely to the professional she hired.

Can the IRS Pursue Old Taxes If a Preparer Committed Fraud?

Central to this case was whether the IRS could “reach back” more than 20 years to collect unpaid taxes when it was the preparer, rather than the taxpayer, who acted fraudulently. Normally, the IRS is bound by statutes of limitation, limiting how long after a return is filed they may pursue collection. An exception exists, however, in cases involving fraud. 

What The Third Circuit Clarified Is That This Exception
Applies Even Where The Fraud Was Perpetrated By A
Third-Party Preparer, Not The Taxpayer Personally.

The Third Circuit ruled in favor of the IRS. The opinion, issued on August 18, 2025, states that the statute of limitations for tax collection is suspended in cases of fraud, regardless of whether the taxpayer herself participated in or even knew about the fraudulent activity. This means that if a return preparer commits fraud on a filing, the IRS can act to collect what’s owed, no matter how much time has passed.

Why This Matters

This case puts taxpayers on alert: you can be held responsible for fraudulent acts committed by the people you hire to prepare your taxes, even many years down the road. It’s a stark reminder of the importance of vetting professionals and maintaining personal oversight of your tax filings. For the IRS, the decision reinforces a powerful tool for tax enforcement, deterring potential tax fraud through the actions of preparers.

The Takeaway

Murrin v. Commissioner strengthens the IRS’s hand, confirming that taxpayers may have liability for their preparers’ misconduct, whether or not they had knowledge of it. 

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Sources: 

1.       https://www.law360.com/tax-authority/cases/6669b92710f9844ee6dacfc6

2.      https://www.law360.com/agencies/u-s-court-of-appeals-for-the-third-circuit