Civil assessment and the open-ended exception
For most returns, the IRS has a limited period after filing to assess additional tax, and that period is longer when a large amount of income was omitted. Fraud changes the picture. When a return is false or fraudulent with intent to evade tax, the IRS can assess tax for that year at any time, and the same is true when no return was filed at all. The IRS carries the burden of proving fraud by clear and convincing evidence, a higher bar than in an ordinary tax dispute. Once tax is assessed, a separate period for collection begins. New York and other states set their own assessment rules, and they do not always match federal law.
The criminal clock
Criminal tax charges have their own limitations periods, and for most federal tax crimes the period is longer than the general default for federal offenses. The clock usually starts from the act charged, such as filing a false return, and for evasion it can run from the last act taken to evade. Later conduct can therefore matter: a false statement to an agent, a concealed asset, or a misleading submission may be treated as a new act of evasion. Time spent outside the United States or as a fugitive can pause the count. Because of this, the age of a return does not by itself settle criminal exposure, and state criminal tax laws have separate periods of their own.
Questions to answer before you act
Before filing amended returns or contacting the IRS about an old year, it helps to know which periods are clearly closed, which may still be open, and how a disclosure would be viewed. We review the returns as filed, when they were filed, any agreements that kept a period open, and what has happened since, including notices, audits, and statements already made. Signed agreements extending the assessment period, often requested during audits, are common and easy to forget. We also look at whether any year was never filed, since that changes the analysis. Then we discuss which course fits the facts, including a formal voluntary disclosure, and what each available course would involve.
