Tax Matters: Statutes of Limitation
| Jurisdiction | United States,Federal |
| Citation | Vol. 19 No. 6 Pg. 3 |
| Pages | 3 |
| Publication year | 2006 |
Vol. 19, No. 6, 3. Tax Matters: Statutes of Limitation
Utah Bar Journal
Vol. 19, No. 6
November/December 2006
Vol. 19, No. 6
November/December 2006
Tax Matters: Statutes of Limitation
Tax Matters: Statutes of Limitation
by Paul K. Savage
Some taxpayers still haven't recovered from their
disappointment that the computers at the IRS didn't
explode when the calendar rolled over to 2000, but we should
all be thankful they did not. Government snafus seldom result
in good news for citizens, despite the hopes and prayers of
many that somehow the IRS wouldn't be able to collect
taxes in the new millennium. Instead, each year taxpayers
still have to count all the chickens that finally hatched in
order to calculate how much Uncle Sam can lay claim to. We
start our calculations by determining our gross income
Congress has defined gross income in broad terms as "all
income from whatever source derived" and then provided a
non-exclusive laundry list of examples, such as compensation
for services, business income, interest, rents, royalties
dividends, alimony, etc. (See Section 61 of the Internal
Revenue Code, hereafter "IRC"). It seems pretty
simple on its face, until one realizes that hundreds of
additional sections of code also come into play, not to
mention the thousands of pages of regulations and rulings and
innumerable interpretive court decisions
Little wonder that Justice Learned Hand once wrote:
In my own case the words of ... the Income Tax [code]...
merely dance before my eyes in a meaningless procession:
cross-reference to cross-reference, exception upon exception
à couched in abstract terms that offer no handle to seize
hold of à leave in my mind only a confused sense of some
vitally important, but successfully concealed, purport, which
it is my duty to extract.... (Learned Hand, the Spirit of
Liberty (1952), p. 213.)
The good news is that it is no crime to misunderstand the tax
code. Sure, if a person fills out a tax return incorrectly it
may be audited and result in a subsequent tax bill, together
with interest and maybe even underpayment penalties. But to
go to jail a person has to "cheat," which means
that the IRS can prove that a person willfully broke the law.
That is a lot different from getting confused or
misunderstanding something.
Neither must a taxpayer look over her shoulder for very long
Typically, the IRS can only audit taxes for three years from
the...
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