Supreme Court Denies Cert in Murrin on Issue of Whether Taxpayer's Fraud is Required for § 6501(c)(1) Unlimited Statute of Limitations (6/22/26)

Today, the Supreme Court denied the petition for certiorari in Murrin v. Commissioner (Sup. Ct. No. 25-988), docket here. See Order List dated 6/22/26, here at p.3, The Third Circuit opinion from which Murrin sought cert was Murrin v. Commissioner, 158 F.4th 527 (3rd Cir. 2025), here.

The question presented in the petition here was:

Whether, under 26 U.S.C. § 6501(c)(1), the IRS may assess tax beyond the Code’s three-year limitations period based solely on the fraudulent intent of a third-party, even when the taxpayer herself neither intended to evade tax nor knew of any wrongdoing.

The question as framed by the SG in the Commissioner’s Brief in Opposition here was:

Whether the indefinite limitations period in 26 U.S.C. 6501(c)(1) applies to a false or fraudulent return prepared by a tax return preparer who acted with the intent to evade tax.

Tax Court Holds that IRS Must Prove Return Fraud After a Convicted Spouse is Convicted for Tax Evasion (5/30/26)

In Li v. Commissioner, T.C. Memo. 2026-42 (T.C. Case 12133-23 at #35, here, at #35, and GS here, the Court addressed proof issues for applying the unlimited statute of limitations for a joint return spouse (“unconvicted spouse”) after the other spouse was convicted of tax evasion (“the convicted spouse”). Of course, as to the convicted spouse, collateral estoppel will apply to establish fraud for the unlimited statute of limitations (§ 6501(c)(1)) and the civil fraud penalty (§ 6663). Li addresses the issue of the effect of the convicted spouse’s conviction on the unconvicted spouse’s statute of limitations (§ 6501(c)(1)),

The background is the Allen issue. In Allen v. Commissioner, 128 T.C. 37 (2007), the Court held that fraud on a return by a return preparer without the taxpayer’s personal fraud invoked the unlimited statute of limitations in § 6501(c)(1). The issues Allen raises are discussed in several blog entries over the years, but I think they are presented in my most recent blogs: Update on Murrin Petition for Cert re Unlimited Civil Statute of Limitations for Non-Taxpayer Fraud Reported on Tax Return (Federal Tax Procedure Blog 5/19/26), here; and Further on Murrin and Allen and the Unlimited Statute of Limitations for Fraud on the Return (Federal Tax Procedure Blog 4/30/26), here.

Stripped down to basics, the current status of the Allen issue is as follows:

• for courts applying the Allen holding (that the preparer’s fraud alone will suffice to the unlimited statute of limitations; the taxpayer’s fraud is not required). This includes all courts addressing the issue except the Federal Circuit.
• the Federal Circuit held that the taxpayer’s fraud is required, at least in a context where the fraud on the return was not the preparer’s fraud (although the Federal Circuit did not intimate that preparer fraud would suffice).

Li dealt with the unlimited statute of limitations for the unconvicted spouse after the convicted spouse’s tax evasion conviction. The holding was that, as to the unconvicted spouse, the IRS must prove fraud on the return by clear and convincing evidence of fraud on the return (which need not necessarily be the unconvicted spouse’s personal fraud). In the Li facts, that means that the unconvicted spouse is not subject to collateral estoppel for the convicted spouse's conviction. Li does not address the issue I discuss in the first blog above as to whether fraud on the return committed by others than the tax return preparer (e.g., tax shelter promoters) will suffice.

I have synthesized the Li Opinion in my working draft for the Federal Tax Procedure Editions for 2026 (to be published in early August). I offer that synthesis here in the paragraph after discussing the Allen issue (note that the footnotes are presented after the text; the numbering on the footnotes will not be the same in the working draft or the final 2026 Practitioner Edition):

Further on Murrin and Allen and the Unlimited Statute of Limitations for Fraud on the Return (4/30/26)

I read earlier this week an excellent article on Murrin v. Commissioner, 158 F.4th 527 (3d Cir. 2025), here, cert petition pending (see here). Bryan Camp, The New Forever Rule for Record Retention (Tax Notes March 3/25/26), here. Professor Camp is concerned, as he was in filing an amicus brief in Murrin, with the potential application to innocent taxpayers of § 6201(c)(1)’s unlimited statute of limitations for a “false or fraudulent return with the intent to evade tax.” Murrin held that the taxpayer’s fraud is not required and that a return preparer’s fraud would suffice to apply the unlimited statute of limitations for fraud. For further on Murrin, see my post Third Circuit Holds Taxpayer Fraud is not Required for 6501(c)(1) Unlimited Statute of Limitations, Creating Conflict (Federal Tax Procedure Blog 8/18/25; 10/17/25).

In an alarmist mode, Professor Camp concludes his article by stating that, unless the problem of § 6201(c)(1) applying to innocent taxpayers is fixed, “I think we must all advise our clients to keep their records . . . forever.” (Emphasis supplied.) What does forever mean in this context? That's a quibble. Professor Camp is not just content to provide that bottom line from Murrin but repeats his arguments in his amicus brief as to error in Murrin and the predicate tax court opinion in Allen v. Commissioner, 128 T.C. 37 (2007), here.

I encourage those interested in the issue (which I call the Allen issue) to read Professor Camp’s article. I have not recently stepped through the legislative and statutory history he discusses in support of his claims, but my recollection is that I was not then sure that they support his claims. In any event, I am sure that for a long period of time since the early tax law, practitioners, including me, assumed that § 6201(c)(1) required taxpayer fraud. Allen appeared out of the blue, so to speak. But now that, in Justice Kagan's words “we are all textualists now,” if we focus on the text of § 6201(c)(1), there is no textual reading that would limit its scope to taxpayer fraud if the fraud is on the return. In other words, at best regarding Professor Camp's claims, the actual text is ambiguous as to whether the text of § 6201(c)(1) requires the taxpayer's fraud.

Further, on the purpose of § 6201(c)(1), I do not conceive it is as a punishment provision but a recognition that fraud on the return makes discovery by the IRS more difficult. After all, the consequence of the unlimited statute of limitations is that the taxpayer pays the tax the taxpayer owed ab initio. True, the taxpayer may have to pay interest, but tax and interest are not penalties. The taxpayer Professor Camp is concerned about is the truly innocent taxpayer relying on a fraudulent preparer; for such a taxpayer there will be no penalty because (i) § 6662 civil penalty which does not apply with taxpayer reasonable cause (unless, for some § 6662 civil penalties, the reasonable cause exception does not apply which is not likely in an innocent taxpayer context) and (ii) § 6663 civil fraud penalty does not apply unless taxpayer fraud is involved. So, from that perspective, the truly innocent taxpayer suffers no penalty with respect to the fraud on the return; rather, he would just pay the tax and interest that are in the helpful metaphor, his dues for a civilized society.

That’s all I have on the merits of Murrin and Allen. Just a few more comments:

Tax Court (Lauber) Rejects Bullshit Syndicated Conservation Easement (BSSCE) Valuation Claim (2/19/26; 5/21/26)

Today, Judge Lauber called out yet another bullshit syndicated conservation easement (“BSSCE”). North Donald LA Property, LLC v. Commissioner, T.C. Memo. 2026-19 T.C. No. 24703-21, here, at # 476; TN here; and GS here.The BSSCE claimed a charitable contribution of $115,391,000. The flaw that swung the case against BSSCE was, as Judge Lauber held in the opening (Slip Op. p. 3):

We conclude here, as we did in J L Minerals, LLC v. Commissioner, T.C. Memo. 2024-93, at *3, that the valuation of the conservation easement “was an outrageous overstatement,” wholly untethered from reality. Employing the comparable sales method, as backstopped by the price actually paid to acquire the property in March 2016, we find that its “before value” was $2,975 per acre and that its “after value” was $2,300 per acre. The delta between these figures—the reduction in value attributable to the easement—is $675 per acre. The value of the easement—and hence the allowable charitable contribution deduction—is thus $175,824 ($675 × 260.48 = $175,824).

For those who are valuation enthusiasts, I suppose there is a lot to chew on. 

There are some interesting snippets in the opinion. I will list them in my numbered further comments below. The main things I want to write on are (i) the bottom-line valuation and (ii) the rejection of the civil fraud penalty for bullshit valuations. At trial, despite claiming a $115,391,000 value on the return, North Donald’s simultaneous opening brief (pp. 6, 124 & 202) described the valuation as:

5. Whether the value of the Easement Donation, as determined by Petitioner’s expert (Mr. Catlett), is $61,235,000?

* * * * 

824. The value of the Easement Donation is as determined by Petitioner’s expert, Mr. Catlett, $61,235,000. Entire Record.

* * * * 

Because the Catlett Appraisal is the only appraisal before the Court that considered the relevant, available data regarding the quantity and quality of the clay reserves on the NDLA Property, the Court should adopt Mr. Catlett’s determination that the value of the Conservation Easement is at least $61,235,000.

So, after trial, North Donald conceded $54,156,000 of the amount it claimed on the return. More importantly, after trial, North Donald still claimed a value of $61,235,000. Judge Lauber found that the actual value was $175,824, which is 0.29% of the value North Donald claimed at trial. North Donald presented a gross overvaluation at trial by presenting, I guess with a straight trial face on, a valuation methology—described by Judge Lauber as the “Income Approach”—that has repeatedly been rejected by the Tax Court, as Judge Lauder notes (Slip Op. 54-59.)  Some interesting points of Judge Lauber’s analysis of petitioner’s claimed valuation:

Third Circuit Holds Taxpayer Fraud is not Required for 6501(c)(1) Unlimited Statute of Limitations, Creating Conflict (8/18/25; 10/17/25)

Added 10/22/25 @ 2:40pm: On October 17, 2025, the Third Circuit denied rehearing and rehearing en banc and issued a revised opinion in Murrin v. Commissioner, 158 F.4th 527 (3rd Cir. 10/17/25), CA3 here and GS here. The revised opinion reaches the same result as the earlier opinion--fraud on the return permits the unlimited statute of limitations regardless of whether or not it is the taxpayer's fraud. I have not analyzed the opinion to see where precisely the changes were. The opinion is a straight-foward textualist reading of the Code provision. It is apparent that, as with the original opinion, the author is not that familiar with tax procedure. (See e.g., p. 4 n. 1, basically same as original opinion.)

In Murrin v. Commissioner, 152 F.4th 136 (3rd Cir. 8/18/25), CA3 here,TN here, and GS here, the Court held that the §6501(c)(1), here, unlimited statute of limitations applying "In the case of a false or fraudulent return with the intent to evade tax" applies even without the taxpayer's personal fraud. The opinion is a straightforward textualist interpretation of the governing statute. Since the opinion is relatively short, I am not sure my nitpicking (aka pontificating) over the reasoning and specific text would be helpful to readers of this Blog, most of whom are already familiar with the issue.

In the event my thoughts may be helpful, I link here first my prior blogs generated by the search terms "allen fraud limitations" which picks up the blogs that discussed the issue. (If you click that link, the returns are first in some relevance scoring of the content order for the terms but there is a link to put them in reverse date order.) The more recent blog discussions that I think may be most helpful to readers wanting more than offered in Murrin are:

• On the Tax Court decision in Murrin: Tax Court Again Declines to Reconsider Its Holding that the Preparer's Fraud without the Taxpayer's Fraud Invokes Unlimited Statute of Limitations (Federal Tax Procedure Blog 1/25/24; 2/5/24), here (where I discuss and link Professor Bryan Camp's discussion of the Tax Court opinion in Murrin) (those reading the Third Circuit opinion in Murrin will see that Professor Camp filed an amicus in favor of the taxpayer's position).
• On BASR P’ship v. United States, 795 F.3d 1338 (Fed. Cir. 2015), which Murrin conflicts (Murrin substantially adopts the dissenting opinion in BASR), I did not write a separate blog on the BASR opinion, but I wrote one on the court awarding attorneys fees under § 7430: Major Attorneys Fee Award for BASR Partnership Prevailing on the Allen Issue in Federal Circuit (Federal Tax Procedure Blog 2/11/17), here. This conflict certainly insures a petition for cert by Murrin. I suspect that there may be a flurry of amicus briefs on the petition and, if cert is granted, on the merits briefing because a lot of wealthy taxpayers investing in fraudulent taxpayers have a dog in the hunt, so to speak.
• On City Wide Transit, Inc. v. Commissioner,  709 F.3d 102 (2d Cir. 2013) discussed in Murrin: Second Circuit Holds That Fraud on the Return -- Even If Not the Taxpayer's -- Causes an Unlimited Civil Assessment Statute of Limitations to Apply (Federal Tax Procedure Blog 2/4/13), here.
• My early venture into the subject discussing an important extension of a holding that the taxpayer's fraud is not required if the return is fraudulent: Civil Tax Statute of Limitations for Fraudulent Tax Shelters (Federal Tax Procedure Blog 12/19/09), here.

 This blog entry is cross-posted on the Federal Tax Crimes Blog, here.

Tax Court Again Declines to Reconsider Its Holding that the Preparer's Fraud without the Taxpayer's Fraud Invokes Unlimited Statute of Limitations (1/25/24; 2/5/24)

Long-time readers of this blog and the parallel blog Federal Tax Crimes may recall that I have had several postings on the issue of whether § 6501(c) unlimited statute of limitations for fraudulent returns requires (i) the taxpayer's fraud or (ii) may be a third party's fraud that is incorporated in the taxpayer's return without the taxpayer's fraud. The classic case is a preparer's fraud, but could also include fraud on an information return (such as a K-1 for partnership flow-through reporting).

At the end of this blog, I list significant Federal Tax Procedure or Federal Tax Crimes postings on the issue. Basically, the state of play was that the Tax Court held in a precedential decision that the taxpayer's fraud is not required. Allen v. Commissioner, 128 T.C. 37 (2007). The Court of Appeals for the Federal Circuit held that the taxpayer's fraud is required. BASR P'ship v. United States, 795 F.3d 1338 (Fed. Cir. 2015). In Finnegan v. Commissioner, 926 F.3d 1261 (11th Cir. 2019), the Court affirmed the Tax Court's Allen holding that the taxpayer waived the statute of limitations argument in the Tax Court.

In Murrin v. Commissioner, T.C. Memo. 2024-10, TA here & GS here, decided yesterday, the Tax Court held that Allen was still the interpretation the Tax Court will apply despite the holding in BASR. The Murrin opinion is 13 pages long and analyzes why BASR was not sufficiently persuasive to justify reconsidering its precedential holding in Allen.

BASR is not binding precedent in Murrin under the Tax Court's Golsen rule because appellate authority is only binding when in the Circuit to which an appeal would be taken in the case (barring stipulation otherwise). Mrs. Murrin lived in New Jersey when she filed the Tax Court petition. Thus, her appeal would be to the Third Circuit which has no authority in point, thus requiring the Tax Court to apply its own authority under Golsen.