Taxpayers Remain Liable for Preparer Errors Despite Intent

Strategic Insights -

The United States Court of Appeals for the Third Circuit has ruled in the case of Murrin v. Commissioner that taxpayers are still liable for errors and inaccuracies on their tax returns, even if caused by their preparer's fraudulent intent. The decision affirms the U.S. Tax Court's finding that the IRS can assess tax at any time when a return is prepared and filed with the intent to evade tax, regardless of whose intent it was. This ruling underscores the importance of taxpayers carefully reviewing their tax returns before filing and understanding the potential consequences of preparer errors.

Key Takeaways:

  • The Third Circuit Court has ruled that taxpayers are still liable for errors and inaccuracies on their tax returns, even if caused by their preparer's fraudulent intent.
  • The IRS can assess tax at any time when a return is prepared and filed with the intent to evade tax, regardless of whose intent it was.
  • The standard three-year statute of limitations does not apply in cases where the return is false or fraudulent with the intent to evade tax.
  • Taxpayers are responsible for the accuracy of their tax returns, and errors or inaccuracies made by their preparer can result in significant financial consequences years or even decades later.
  • The case of Murrin v. Commissioner highlights the importance of taxpayers carefully reviewing their tax returns before filing and understanding the potential consequences of preparer errors.
  • The ruling affects taxpayers who have relied on their preparer to ensure the accuracy of their tax returns, and may face significant financial consequences if errors or inaccuracies are discovered years later.
  • The decision underscores the need for taxpayers to take an active role in reviewing and verifying the accuracy of their tax returns, rather than relying solely on their preparer.

Statistics:

  • The Murrin v. Commissioner case involves tax returns from 1993 to 1999.
  • The IRS sent a notice of deficiency in 2019, 20 years after the tax returns were filed.
  • The standard three-year statute of limitations does not apply in cases where the return is false or fraudulent with the intent to evade tax.
  • The case highlights the potential financial consequences of preparer errors, which can result in unpaid taxes, accuracy-related penalties, and interest.

Sources:

  • Murrin v. Commissioner, No. 24-2037 (3d Cir. 2025)
  • U.S. Tax Court
  • Internal Revenue Code § 6501(c)(1)
  • Mondaq Ltd, 2025