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.
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.
Contact the Tax Lawyers at
www.TaxAid.com or www.OVDPLaw.com
or Toll Free at 888 8TAXAID (888-882-9243)
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
The U.S. Supreme Court declined on June 22, 2026 to review a woman's challenge against the Internal Revenue Service over the period in which the agency can assess taxes on a taxpayer when a fraudulent third party triggers the liability.
ReplyDeleteThe U.S. Supreme Court left intact a Third Circuit ruling that the IRS properly invoked a statutory exception in extending a three-year assessment period in order to pursue unpaid taxes stemming from false returns filed by a taxpayer's former accountant.
In an order list, the justices announced that Stephanie Murrin's petition was among the cases they wouldn't examine further. As is its custom, the high court did not offer a reason for its decision.
The court's denial left intact an Aug. 18 ruling from the Third Circuit, which held that the IRS properly invoked the fraud exception under Internal Revenue Code Section 6501(c)(1) to extend the three-year assessment period and pursue Murrin's unpaid taxes, which stemmed from false returns filed by her former accountant Duane Howell. The appellate court decision affirmed the U.S. Tax Court opinion in Murrin's case.