The general rule is that the assessment of tax must be made within three years after the return is filed. See IRC § 6501(a).

The Received Date does not necessarily establish the filing date. The filing date is established after applying IRC rules described at IRM 25.6.2.4.15, When a Document Is Treated As Filed Under the IRC, which may override the Received Date. The most commonly applied filing date rules are:

A taxpayer is not considered to have filed a tax return (which begins the period of limitations on assessment) until the taxpayer files a valid tax return. A valid return is described at IRM 25.6.2.4.14. In general, a tax return is considered sufficient for establishing a statute of limitations period if it meets the following criteria:

A return filed on the wrong form may be a valid return for the purpose of starting the period of limitations if it provides sufficient data to calculate a tax liability.

For information on how to correct timely original returns that were processed under an incorrect tax period/account, see IRM 25.6.5.10.3.

In general, the filing of an amended return does not extend the statute of limitations on assessment. If an amended return is received within 60 days from when the Assessment Statute Expiration Date would otherwise expire, a period of 60 days from the received date is allowed for the assessment of the additional amount of tax on that return imposed by Subtitle A (income tax). I.R.C. § 6501(c)(7). For example, if an amended income tax return for the 2003 tax year was received on April 9, 2007, you would have 60 days from that date to assess the additional amount of tax on that income tax return.

Civil Service and Federal Employee’s Retirement System (CSRS & FERS). If an employer amends an original Form 941 because of a change in the CSRS, the normal three-year period of limitations remains in effect.

Form 2290, Heavy Vehicle Use Tax Return, covers a beginning tax period on the month the vehicle is first used to June 30 of the following year. Thereafter, July 1 through June 30 is the period covered. The due date to file is the last day of the next month following the month (1) that the vehicle is first used in a given tax period, (2) that the vehicle's mileage use limit is exceeded, (3) that an increase in the vehicle's taxable gross weight results in an additional tax liability, or (4) that a person acquires a vehicle for which the tax has been suspended. Generally, the period of limitation is 3 years after the due date of the return, or 3 years after the return was actually filed, whichever is later. See IRM 21.7.8.4.2.1, Excise Taxes.

In general, some tax forms show more than one tax amount (i.e., a multipurpose form). Questions may arise as to whether a return for a tax has been filed where there are no entries for that particular tax on the multipurpose form and a required schedule for that tax has not been attached to the return.

The Self Employment Contribution Act (SECA) is calculated on Schedule SE, Self-Employment Tax, (an attachment to Form 1040) and the tax is entered on Form 1040. A taxpayer has filed a return for purposes of SECA even though the Form 1040 contains no entry with respect to the SECA tax. See Rev. Rul. 82-185 (the rationale is that the SECA tax imposed by chapter 2 of the Code and the individual income tax imposed by chapter 1 are so closely related that they are not separate and distinct taxes for reporting purposes).

FICA tax on tips and income tax on Form 1040. The social security tax imposed on tips by I.R.C. § 3101 is calculated on Form 4137, Social Security and Medicare Tax on Unreported Tip Income, (an attachment to Form 1040) and the tax is entered on Form 1040. An employee has not made a valid return for purposes of the social security tax imposed on tips by I.R.C. § 3101 if he or she makes no entry for the tips on Form 1040 because they are separate and distinct taxes. See Rev. Rul. 79-39, 1979-1 C.B. 435.

Household Employment Tax and Form 1040. The household employment taxes (the social security and Medicare taxes imposed the Federal Insurance Contributions (FICA), the tax imposed under the Federal Unemployment Tax Act (FUTA ) and withheld income tax) are calculated on Schedule H, Household Employment Tax, (an attachment to Form 1040), and the tax is entered on Form 1040. An employer has not made a valid return for purposes of the household employment taxes if he or she makes no entry for the taxes on Form 1040. If the Schedule H is filed without the Form 1040, the statute of limitation for assessment begins with the filing of the Schedule H document.

Various excise taxes on Form 720. Form 720, Quarterly Federal Excise Tax Return, reports many miscellaneous excise taxes imposed by subtitle D (I.R.C. §§ 4001-5276).

Excise tax paid with Form 1040. Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts (an attachment to Form 1040), is used for additional taxes on individual retirement arrangements, other qualified retirement plans, modified endowment contracts, Coverdell education saving accounts, qualified tuition programs, and Archer medical saving accounts. The amount of any tax is entered on Form 1040 for the Form 5329 as follows:

IRC Section 6013(b) allows a husband and wife to file joint returns after one, or both spouse(s) file(s) a married filing separate return. Under IRC Section 6013(b)(2)(A)-(D), the election may not be made:

For tax years beginning on or before 07/30/1996, the amount shown as tax on the joint return must be paid in full.

For ASED purposes, the filing date of the joint return depends on what returns were filed before the election (IRC Section 6013(b)(3)(A)(i)-(iii)).

A Transaction Code (TC) 560 extends the ASED. The function responsible for resolving the case will input the TC 560.

If the deadline for filing a separate to joint return has expired (see paragraph (1) above) and the non-filing spouse has not filed a separate return, the Service is not authorized to process a return based on the joint return information. A disallowance letter must be sent to the taxpayers in which a return has been previously filed. A separate letter (916C or 112C) must be sent to the non filing spouse requesting an original return.

If the election for filing a joint return is made later than the dates provided in paragraph (1) above, and both taxpayers have previously filed a return, you must send a separate disallowance letter (105C) to both taxpayers.

The Service has authority to prepare and process a tax return when a person fails to file a required return or files a false or fraudulent return under authority of IRC § 6020(b). If the Service processes a tax return prepared under the authority of IRC § 6020(b), the assessment date will start the period for the statute of limitations for collection per IRC 6502(a)(1), but does not start the period of limitations for assessment.

If the taxpayer signs a SFR return, it becomes the taxpayer’s return per IRC Section 6020(a) and starts the assessment period of limitations. If the Service has processed an unsigned Substitute for Return (SFR), the taxpayer may still file a signed tax return for the same tax year as the SFR return. The assessment statute period for that tax year will begin with the received date of the taxpayer’s signed return. See IRC Section 6501(a),(b)(3).

Form 942, Employer's Quarterly Tax Return for Household Employees, is obsolete for tax years beginning in 1995, but it may still be referred to the Statute Unit for clearance. Because Form 942 and Form 941, Employer's Quarterly Federal Tax Return, report the same taxes, but for different employees, the period of limitations for assessment for a period starts for the taxes that should have been shown on a Form 942 if a Form 941 is filed for that same period.

The role of the Statute function in processing these employment tax forms. Upon receipt of a Form 942 for a period, check whether Form 941 was filed for the same period.

If the ASED is imminent, any assessment must be made on the Form 941 account. You must monitor for the posting of the TC 150 since this will establish filing requirements for Form 941 and/or 940. Delete any Form 941 and 940 filing requirements, which may have been created by processing Form 941 after posting of the TC 150.

If a Form 941 has not been filed, clear the Form 942 and route to Code & Edit where it will be converted to Form 941.

A return reporting for a period that is less than the tax period (whether it is a full or short tax year), does not start the period of limitations, (Gensinger v. Commissioner, 18 T.C. 122 (1952), aff’d, 208 F.2d 576 (9th Cir. 1953); see also Pittsburgh Realty Investment Trust v. Commissioner, 67 T.C. 260 (1976) (liquidation of corporation). Where the taxpayer incorrectly reports on a fiscal year, the limitations period for a calendar year covered by two such returns begins with the filing of the second return. Atlas Oil & Refining Corp. v. Commissioner, 22 T.C. 552 (1954). The rationale is that the improperly filed returns will, if pieced together, provide the Commissioner with sufficient information to determine the tax liability for the period for which the return should have been filed. Paso Robles Mercantile Co. v. Commissioner, 12 B.T.A. 750, 753 (1928), aff’d, 33 F.2d 653, 654 (9th Cir. 1929).

For procedures on how to make assessments when the ASED is about to expire, see IRM 25.6.5.10.1, Procedures for Expeditious Assessments, and IRM 25.6.5.10.2, After Hours and Imminent Assessments.

A Form 872 (Consent to extend the ASED) signed by the taxpayer and an IRS representative prior to the expiration of the normal ASED, extends the ASED to the date agreed to by both parties. The date can be further extended by another written agreement, if it is signed before the ASED of the previous agreement. See IRM 25.6.22, Extension of Assessment Statute of Limitations by Consent.

There is no period of limitations on assessment for a false or fraudulent return with intent to evade tax.

An amended non-fraudulent return submitted after a fraudulent return does not begin the period of limitations. See Badaracco v. Commissioner, 464 U.S. 386 (1984).

In processing the amended return, you must coordinate fraud/potential fraud cases with Examination. If examination does not select the case, follow the procedures in IRM 25.6.5.10.1(7).

The following states how the Service defines Fraud:

The tax may be assessed within 6 years after the original return was filed (IRC Section 6501(e)), if the taxpayer omits:

An item is not considered omitted from gross income, the gross estate, total gifts, or excise tax reported on Form 720 if the taxpayer adequately disclosed the item on the return or on an attached statement. The disclosure must adequately apprise the Service of the nature and approximate amount of the item; the actual dollar amount of the omission need not be disclosed.

For purposes of determining gross income, IRC § 61 reflects the general principal that gross income takes into account basis; e.g., for purposes of IRC § 61(a)(2), gross income derived from business, Treas. Reg. § 1.61-3(a) provides that in a manufacturing, merchandising, or mining business, "gross income" means the total sales, less the cost of goods sold. Under IRC § 6501(e)(1), however, in the case of a trade or business, gross income means receipts from sales of goods or services before reduction by cost of sales or services.

Other returns showing income are as follow:

A decrease in tax, created by the carryback of a net operating loss or a capital loss can be reassessed at any time within the ASED of the year in which the NOL or capital loss occurred. See IRC Section 6501(h). Also, the amount of a carryback to a year may be adjusted if that carryback is open, even if the loss year is closed.

Generally, the Service may only make an assessment under IRC § 6501(h) of an amount that is attributable to the carryback; however, if a taxpayer receives a refund for a tentative carryback adjustment under IRC § 6411 (on Form 1139, Corporation Application for Tentative Refund, or Form 1045, Application for Tentative Refund), the taxpayer has opened the door so that the assessment period is open for items unrelated to the carryback under IRC § 6501(k). The amount, however, that the Service can assess is limited to the amount erroneously refunded, reduced by amounts assessed under IRC § 6501(h).

A decrease in tax, as a result of IC carried back from a later year, can be reassessed at any time within the ASED of the year from which the carryback originated. However, if the IC was made available (for carryback to a prior year's tax) because of the application of an NOL or capital loss carryback from a later year, the decrease can be reassessed at any time within the ASED of the year in which the NOL or capital loss occurred. See IRC Section 6501(j).

Generally, the Service may only make an assessment under IRC § 6501(j) of an amount that is attributable to the carryback; however, if a taxpayer receives a refund for a tentative carryback adjustment under IRC § 6411 (on Form 1139, Corporation Application for Tentative Refund, or Form 1045, Application for Tentative Refund), the taxpayer has opened the door so that the assessment period is open for items unrelated to the carryback under IRC § 6501(k). The amount, however, that the Service can assess is limited to the amount erroneously refunded, reduced by amounts assessed under IRC § 6501(j).

If a taxpayer fails to file information described in IRC Section 543(a) and 544 with the return, then Personal Holding company tax can be assessed at any time within 6 years after the corporation return was filed. See IRC Section 6501(f).

If a taxpayer sold a principal residence before 05/07/1997 at a gain, the statutory period for assessment of tax on the gain is extended to three years from the date the taxpayer notifies the IRS of:

In cases where property is involuntarily converted into cash and the taxpayer timely purchases qualifying replacement property, the taxpayer may elect to defer gain (if any) on the conversion to the extent the amount realized from the conversion exceeds the cost of the replacement property. There are two special limitation periods for assessment related to involuntary conversions for which the taxpayer has made the election.

If the taxpayer elects to defer gain attributable to an involuntary conversion, the period of limitations for assessment does not expire before three years from the date that the taxpayer notifies the Service in accordance with applicable regulations of the taxpayer's (a) replacement of the converted property, (b) intention not to replace, or (c) failure to replace within the replacement period. See I.R.C. § 1033(a)(2)(C); Treasury Regulation §1.1033(a) - §(c)(5).

If the taxpayer purchases replacement property before the beginning of the last taxable year during which any part of the gain is realized (i.e., an anticipatory replacement) a deficiency arising from an election to defer for any taxable year ending before such last taxable year may be assessed within the period of limitations for that last taxable year. See I.R.C. § 1033(a)(2)(D); Treas. Reg. § 1.1033(a) 2(c)(6).

New IRC § 6501(c)(10) provides for an extended period of limitations to assess any tax with respect to a listed transaction for which that a taxpayer failed to disclose any information as required under IRC § 6011 and the regulations thereunder. If IRC § 6501(c)(10) applies, then the period of limitations on assessment will not expire before the date that is one year after the earlier of either (a) the date the taxpayer discloses the transaction in accordance with prescribed procedures (see Rev. Proc. 2005–26 or subsequent published guidance) or (b) the date a material advisor meets the requirements of IRC § 6112 with respect to a request by the Secretary under IRC § 6112(b) relating to the transaction.

IRC § 6501(c)(10) applies to taxable years with respect to which the period for assessing a deficiency did not expire before October 22, 2004.

The term "listed transaction" is defined in IRC § 6707A(c)(2) as a reportable transaction that is the same as, or substantially similar to, a transaction specifically identified by the Secretary as a tax avoidance transaction for purposes of § 6011. IRC § 6707A(c)(2) is effective for returns and statements the due date for which is after October 22, 2004 and which were not filed before such date. Listed transaction also is defined in Treas. Reg. § 1.6011-4(b)(2).

Rev. Proc. 2005-26, 2005-17 I.R.B. 965 (April 25, 2005), provides initial guidance with respect to this law. The revenue procedure sets forth procedures that taxpayers and material advisors may follow to disclose previously undisclosed listed transactions for purposes of § 6501(c)(10) and guidance on the date on which the period of limitations will expire if these procedures are followed.

If neither the taxpayer nor the material advisor disclose the required information regarding the undisclosed listed transaction, the period of time for assessment of any tax with respect to the listed transaction is unlimited. In order to determine if the one-year period that will end the period of limitations on assessment under IRC § 6501(c)(10) has started to run, the examiner should consult Rev. Proc. 2005-26, or subsequent published guidance, to determine if the taxpayer or material advisor has complied with the requirements contained in the applicable published guidance. Once the required information is provided, an actual date for the ASED can be determined and entered.

Other exceptions to the normal statutory period for assessment of tax may also apply. Also, IRC § 6501(c)(10) does not shorten any other applicable period for assessment, such as the general three-year period or the fraud exception.

When we receive a written request for a prompt assessment, the tax must be assessed within 18 months after receipt of the request or 3 years after the original return was received, whichever is earlier (IRC Section 6501(d). The request is generally made on Form 4810, Request for Prompt Assessment Under Internal Revenue Code Section 6501(d). The request must be:

A statutory notice of deficiency may be issued by Examination, Collection, Deferred Adverse Tax Consequence (DATC/ASTA) and the Document Matching functions. Except for certain limited exceptions, a statutory notice of deficiency must be issued to assess and collect an income tax, estate tax, gift tax, and certain excise and employment tax deficiencies.

The period of limitations on assessment is suspended during the 90 days (150 days if the notice of deficiency is addressed to a person outside the U.S.) which the taxpayer is given to petition the Tax Court from the deficiency notice and the time during which the Service is prohibited from making the assessment plus 60 days thereafter. The suspension period begins on the day after the mailing of the notice (and not on the day the taxpayer receives the notice).

If the taxpayer petitions the Tax Court, then the Service is prohibited from making the assessment until the Tax Court's decision becomes final.

The Service or the taxpayer may appeal the Tax Court decision within 90 days. If no appeal notice is filed, the decision becomes final. If an appeal is filed, the date the Tax Court decision becomes final depends on the subsequent appeal proceedings. (The filing of an appeal notice by the taxpayer will not stay assessment unless the taxpayer files a bond.)

If the taxpayer does not petition the Tax Court, and does not agree to the deficiency, then the case is closed as unagreed and the deficiency can be assessed since the taxpayer defaulted. The Service has 60 days to process the assessment.

If the taxpayer simply informs the Service that the taxpayer will agree to the asserted deficiency during the 90-day period, the suspension period continues; however, when a Form 870, Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of Overassessment, is filed during the 90-day period, the 60-day period begins because the Service is no longer prohibited from making an assessment. Rev. Rul. 66-17, 1966-1 C.B. 272.

Request technical assistance from the Examination Operation as to whether an assessment is valid if the case contains a deficiency notice.

Third-Party Summonses in general (see I.R.C. § 7609(a)). If a taxpayer or his agent, nominee or person acting under his control, files suit to quash a third-party summons to which the notice procedures of Section 7609 (a) apply, or if the taxpayer (his agent, nominee etc) intervenes in a summons enforcement suit, then the statutes of limitation under both I.R.C. §§ 6501 and 6531 will be suspended while the proceeding and any appeals are pending. See I.R.C. § 7609(e)(1). If the recipient of a third party summons subject to Section 7609(a) or a John Doe summons, has not fully complied with the summons within six months after the date of service and there is not a pending proceeding to quash or to intervene brought by the taxpayer, then the statute of limitation will be suspended beginning on the date which is six months after the service of the summons and ending on the date of the final resolution of summoned person's response. The typical scenario is where a summoned third party not the taxpayer (or taxpayer's agent) ignores the summons or notice or files a suit to quash. I.R.C. § 7609(e)(2).

A designated summons in a CIC examination served on a corporation (but not other types of taxpayers), or any other person to whom the corporation has transferred records, extends the assessment period of limitations during the "judicial enforcement period" as defined by I.R.C. § 6503(j)(3) (i.e., the period that begins on the day a court proceeding regarding the summons is brought and ends on the day the summoned person resolves his response to the summons). See I.R.C. § 6503(j)(3). The period is also suspended during the "judicial enforcement period" of a related summons as defined by I.R.C. § 6503(j)(1)(A)(ii) (i.e., one issued within 30 days of the issuance of the designated summons and relating the same return). If the court requires any compliance with a designated or related summons by ordering that any record, document, paper, object, or items be produced, or the testimony of any person be given, the period of suspension consists of the judicial enforcement period plus 120 days. If the court does not require any compliance with a designated or related summons, the period of limitations on assessment provided in section 6501 shall not expire before the 60th day after the close of the judicial enforcement period.

Generally, the automatic stay is in effect from the date the bankruptcy petition was filed until the date the case is closed, dismissed or the debtor is granted or denied a discharge.

The automatic stay does not prevent the Service from issuing a statutory notice of deficiency but the taxpayer may be prohibited from filing a petition with the Tax Court (unless the stay is lifted by the bankruptcy court).

If a statutory notice has been issued, the period for petitioning the Tax Court has not yet expired before the taxpayer files for bankruptcy, and the automatic stay applies to prohibit the taxpayer from filing a Tax Court petition, the period for assessing the deficiency is suspended during the time the Service is prohibited from making the assessment. See IRM 25.6.5.7.2, Statutory Notice of Deficiency (90 Day Letter) and IRM 5.9.4.2.1, BRA and BAPCPA’s Effect on Assessments.

The petition date is input as the transaction date of the TC 520 and the discharge or dismissal date is input as the transaction date of the TC 521. In some instances the court may close a case without issuing either a discharge or dismissal. A TC 521 is input for these cases, also. See IRM 5.9.5.6, Bankruptcy "Freeze" Code (TC 520).

If you are in doubt that an assessment can be made, contact the Centralized Insolvency Operation (CIO).

The deadline for assessment may be postponed for a period of up to one year as specified by the Secretary of the Treasury for taxpayers (individuals and businesses) determined by the Secretary of the Treasury to be affected by a Presidentially declared disaster. See I.R.C. § 7508A.

See IRM 25.6.6.8.2, Presidentially Declared Disaster Area, for details on what constitutes such an area.

The deadline for assessment may be postponed for a period of up to one year as specified by the Secretary of the Treasury for an individual determined by the Secretary to be affected by a terroristic or military action. See I.R.C. § 7508A.

See IRM 25.6.6.8.4, Presidentially Declared Terroristic or Military Action, for details on what constitutes such actions.

See IRM 25.6.16, for Combat Zones and Other Areas of Military Service.

Tax on flow-through amounts to partners generally is controlled by the statute on the partner’s return; i.e., the tax must be assessed within three years from the date the partner filed his return. Some partnerships, however, may be subject to the TEFRA partnership procedures, which require a unified examination of a partnership and provide a special extension of the period of limitations for assessment of partnership and affected items. A partnership subject to these procedures is still a flow-through entity for income tax reporting purposes and income tax must be assessed against the partners. If a partnership is subject to TEFRA provisions, refer the case to Examination for assistance.

Transferees and transferred assets. The period of limitations for assessment of an initial transferee is one additional year beyond that for the taxpayer. For a transferee of a transferee, the period is extended one year after the period for the prior transferee, but not more than three years after the period as to the taxpayer. See I.R.C. § 6901(c)(2). These periods may be extended by agreement and, moreover, an extension by the taxpayer affects the transferee's own period. The periods may also be suspended during certain court proceedings ( see IRC § 6901 (c), (d),(f)). Generally, a time limitation imposed by state law on fraudulent transfers has no bearing on the assessment period; federal law controls. See United States v. Summerlin, 310 U.S. 414 (1940); Bresson v. Commissioner, 111 T.C. 172 (1998).

Fiduciaries and transferred assets. The period of limitations for assessment against a fiduciary ends at the later of one year after the liability arises or the expiration of the period for collection of the tax. See I.R.C. § 6901(c). This period may be extended by agreement. See I.R.C. § 6901(d).

Contact Examination Classification for clarification of the ASED on these types of cases.