S-4964 — Protecting Innocent Taxpayers from Endless Assessments Act

YourVoice.Now Summary

Civil LibertiesAverage Household Impact

Restores the normal three-year IRS assessment limit for taxpayers whose tax preparer committed fraud without their knowledge.

Civil Liberties

Unlimited IRS assessment window — Narrowed to cases where the taxpayer intended to evade

Average Household Impact

Three-year assessment limit — Restored for taxpayers whose preparer committed the fraud

The details

The IRS normally has three years to come after you for additional tax once you file a return. That time limit disappears entirely if the return was fraudulent. Courts have applied that exception even when the taxpayer did nothing wrong and the fraud was the work of a paid preparer. Those taxpayers can face an open-ended assessment window for the rest of their lives. Two words added to the tax code would close that gap. The unlimited window would apply only when the taxpayer intended to evade tax. Someone whose preparer cheated without their knowledge would get the standard three-year limit back. The change would cover assessments made or proceedings begun after the bill becomes law.

Congressional Summary

Protecting Innocent Taxpayers from Endless Assessments ActThis bill limits the amount of time the Internal Revenue Service (IRS) has to assess taxes related to fraudulent or false federal tax returns where there is no intent by the taxpayer to evade taxes.As background, the IRS generally has three years from the date that a tax return is filed (statute of limitations) to assess taxes owed by the taxpayer for the tax year. However, if a false or fraudulent tax return is filed with the intent to evade tax (fraud exception), then the IRS may assess taxes at any time. In Murrin v. Commissioner the U.S. Tax Court held (and the U.S. Court of Appeals for the Third Circuit affirmed) that the fraud exception applies when a tax return preparer places false or fraudulent entries on a tax return without the taxpayer’s knowledge. In contrast, the U.S. Court of Federal Claims held in BASR Partnership v. Commissioner that the fraud exception only applies if the taxpayer intends to evade taxes.The bill limits the fraud exception to cases in which the taxpayer intends to evade taxes.

Details

Congress: 119th
Chamber: Senate
Status: summarized
Action: Introduced in Senate
Action Date: 2026-07-14
Date Added: 2026-07-31
Source: Congress.gov →

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