§ 5:47 In General
Under the Code, a Trust Fund Recovery Penalty must be assessed within three years of the April 15th following the year during which the quarterly liabilities arose. [I.R.C. § 6501 (a), (b)(2)] For example, the penalty with respect to liabilities arising during 1985 must be assessed on or before April 15, 1989. If the return is filed later than the April 15th following the year during which the liability arose, the statutory period for assessment is three years from the date of filing. If the returns were prepared by the IBS pursuant to I.R.C. § 6020(b), the IRS contends that there is no statute of limitations. [LR.C. § 6020(b)]. The .Internal Revenue Service in the past attempted to argue that there is no statute of limitation for the § 6672 penalty. The Third Circuit, however, ruled that the statute of limitation provided in § 6501(a) does apply to assessments of § 6672 Liabilities.
§ 5:48 Extension During Appeal
If a written preliminary notice of proposed liability is mailed or delivered in person to a ”responsible person-‘ before the’ expiration of the statute of limitations for the assessment of the penalty, the statute will not expire before the later of:
(1) 90 days after the date the notice was mailed or delivered in person, or
(2) if there is a timely protest of the proposed assessment, 30 days after a determination on the protest.
[I.R.C. § 6672(b)(3)]
§ 5:49 Suspension During Summons Disputes
The Tax Reform Act of 1986 provided for the suspension of the taxpayer’s statutes of limitation “in the absence of the resolution” of a statutory third-party recordkeeper’s “response” to a summons if no such resolution is reached within six months following the service of the summons. [I.R.C. § 7609(e)(2)] The statute of limitations is suspended from the date which is six months after the service of the summons until the ending of the “final resolution” of the third-party recordkeeper’s response. The taxpayer’s statute of limitations appears to be extended without regard to whether the taxpayer, or any agent, nominee or other person acting under his or her direction or control, has taken any action with respect to the summons. This could be unfair in the case of an overly broad summons served on a bank or a summons served on an attorney with respect to documents falling within the scope of the attorney-client privilege—not unusual cases. [I.R.C. §§ 6502, 6531]