Question

Need answer ASAP!!!!

Mr. and Mrs. Dint filed their 2015 Form 1040 on March 10, 2017. The couple earned $48,000 from their regular salaried jobs and correctly reported this amount on their Form 1040.

However, during 2015, Mr. and Mrs. Dint also operated an illegal cigarette smuggling business. This side business earned them an additional $18,000. The couple did not report this income on their 1040.

Although their illegal operation was a cash-only business, the Dint's are worried that the IRS might find out about this extra income and charge them penalties and interest for not reporting the income.

What is the latest date that the IRS can assess the Dint's any additional 2015 tax?

		April 15, 2021
		March 10, 2018
		April 15, 2018
		there is no limit to the statute of limitations on the Dint's 2015 tax return

Answer 1

The latest date that the IRS can assess the Dint's any additional 2015 tax will be : there is no limit to the statute of limitations on the Dint's 2015 tax return.

Explanation

The statute of limitations for the IRS to assess taxes on a taxpayer expires three (3) years from the due date of the return or date on which it was filed, whichever is later. Additionally, the IRS statue of limitations gets extended for an even longer time when there is a substantial omission(more than 25 %) of gross income on the return. In these circumstances, the time limit for the IRS to make its assessment gets stretched out to six (6) years from the date of return is filed or deemed filed, whichever is later.

It is also to be noted that no deadline applies where IRS can establish that a taxpayer has i) filed a false or fraudulent return , ii) willfully attempted to evade tax: unlike the circumstances above where the tax retuns are filed (even with errors).

Hence in the present case, Dint willfully attempted to evade tax and thereby IRS can assess the same without any limitations of deadline.