IRS Has No Time Limit If Your Tax Preparer Committed Fraud
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The U.S. Supreme Court just sent a warning to every business owner who relies on outside help to file taxes. On June 23, 2026, the Court declined to hear the appeal in Murrin, letting stand a ruling that gives the IRS unlimited time to assess back taxes – even when the fraud was committed by your tax preparer, not by you.
This is not a hypothetical risk. It is now settled by law.
What Happened in the Murrin Case?
Stephanie Murrin hired a tax return preparer to file her returns from 1993 through 1999. She did nothing wrong – but her preparer did. The preparer filed fraudulent returns with the intent to evade tax.
In 2019 – more than 20 years later – the IRS assessed Murrin for back taxes and penalties. She now owes $328,000, including compounding interest on the original assessment.
Murrin argued that the standard 3-year filing deadline under Section 6501(a) of the tax code should protect her. The IRS disagreed.
Does the IRS Really Have No Time Limit?
Normally, the IRS has three years from the date a return is filed to audit it and assess additional tax. But there is a major exception built into the tax code.
Under Section 6501(c)(1), the IRS can assess tax at any time – with no deadline – when a fraudulent return was filed with the intent to evade tax.
Here’s the part that matters most to you: courts have now confirmed that the fraudulent intent doesn’t need to be yours. If your preparer acted with intent to defraud, the unlimited assessment window opens – even if you had no knowledge of what was happening.
What Did the Courts Decide?
The Tax Court sided with the IRS. Murrin then appealed to the Third Circuit Court of Appeals, arguing that the extended statute of limitations should not apply because she personally had no intent to evade tax.
The Third Circuit disagreed. It ruled that nothing in Section 6501(c)(1) limits the unlimited assessment period to cases where the taxpayer – rather than the preparer – was the one acting with fraudulent intent.
The court acknowledged the harsh outcome but held that the statute’s plain language left no room for a different result. The Supreme Court declined to review the case, leaving that ruling in place as binding law in the Third Circuit and as persuasive authority for courts nationwide.
What Does This Mean for Atlanta Business Owners?
If you use outside to help prepare your business tax returns, you carry real exposure under this ruling. The IRS could assess taxes on returns filed 10, 15, or even 20+ years ago if fraud is later discovered on those filings.
Proving the accuracy of old returns is hard. Records disappear. Documentation from years past is difficult to recover. And interest compounds the entire time.
In Murrin’s case, the combination of penalties and decades of accrued interest turned a tax dispute into a $328,000 bill. The financial consequences of a preparer’s misconduct – misconduct you may have known nothing about – can be severe.
How Can You Protect Yourself from This Risk?
The best protection starts with who you choose to prepare your taxes and how well you understand what’s in those returns.
Here are steps to take right now:
- Verify credentials of anyone currently preparing your taxes
- Review prior years that involved a third-party preparer you no longer use
- Retain documentation that supports key deductions and positions taken on past returns
- Consult a CPA if you have any concerns about returns filed in prior years
The Murrin ruling makes one thing clear: your preparer’s actions can follow you for decades. Choosing the right professional – and staying informed – is not optional.
How Can Virtue Advisors Help Protect Your Business?
At Virtue Advisors, we combine experienced CPA expertise with AI-powered review tools to ensure every return we prepare is accurate, fully documented, and defensible under IRS scrutiny. We give you complete visibility into your filings – so there are no surprises years from now.
Don’t wait for a problem to find you. If you have concerns about prior year returns or want to ensure your current filings are on solid ground, reach out today.
Ready to protect your business from unexpected IRS exposure?
Contact Virtue Advisors today at (678) 952-9001 or email info@virtuecpas.com to schedule an advisory consultation with our team and get the answers to your business needs.
