Supreme Court lets IRS chase taxpayers forever over preparer fraud

The U.S. Supreme Court declined to hear Murrin v. Commissioner, leaving taxpayers on the hook when a tax preparer's fraud triggers the IRS fraud exception—even if they signed returns in good faith and never intended to evade tax. The move keeps a Third Circuit ruling that removes the usual three-year assessment deadline. For filers who trusted the wrong accountant, the stakes just got far higher.

Key Takeaways

• The Supreme Court refused Murrin's appeal, letting the IRS assess taxes at any time when a fraudulent return was filed with intent to evade tax—even if that intent belonged to the preparer, not the taxpayer.
• Stephanie Murrin could owe the IRS nearly $330,000 after her preparer, Duane Howell, acted with intent to evade tax on her returns without her knowledge, per MarketWatch and Forbes.
• Forbes reports taxpayers are not automatically treated as fraudsters because of preparer misconduct, but the assessment window can stay open for decades.
• The Third Circuit held that Section 6501(c)(1) requires intent to evade tax on the return, not necessarily the taxpayer's personal intent.
• Separately, Bloomberg Tax reported the court declined a jury-trial challenge to more than $15 million in IRS civil fraud penalties.

What Did the Supreme Court Decide in Murrin v. Commissioner?

On Monday, the justices denied certiorari in Murrin v. Commissioner, as Forbes reported. That was not a ruling on the merits, but it left intact a Third Circuit decision that significantly expands when the IRS can assess unpaid taxes.

The appeals court found the statute does not require the taxpayer's intent to evade tax. It requires that there be intent to evade tax attached to the return. Because Howell intended to evade tax on Murrin's filings, the IRS was not bound by the ordinary three-year limit in Section 6501(a).

Why Can the IRS Bill Taxpayers Decades After Filing?

Under normal rules, the IRS has three years from when a return is filed to assess additional tax. Section 6501(c)(1) creates an exception: when a false or fraudulent return is filed with intent to evade tax, the agency can assess tax at any time.

Forbes notes that in preparer-fraud cases, taxpayers cannot assume their own clean hands will keep the IRS away. The decision underscores how carefully filers must vet who prepares their returns, even when fraud penalties still generally depend on the taxpayer rather than the preparer alone.

Cases like this blur the line between white-collar crime and personal ruin—one reason they belong alongside other stories of true crime and financial betrayal.

Who Is Stephanie Murrin and How Much Could She Owe?

MarketWatch reported that Murrin was bilked by her accountant and could owe the IRS nearly $330,000 after the Supreme Court refused to take her case. Forbes identified her preparer as Duane Howell, who intended to evade tax on her returns even though she did not know about the fraud.

The dispute centers on returns filed decades ago. On appeal, the Third Circuit sided with the government, holding that the fraud exception applied even though Murrin did not personally intend to evade tax.

What Else Did the Court Decline on IRS Penalties?

In a separate case, Bloomberg Tax reported the Supreme Court also denied review of a challenge by Herbert and Bonita Hirsch and Harvey and Diane Birdman. The couples argued the Tax Court wrongly denied their demand for a jury trial over more than $15 million in civil tax fraud penalties, citing the 2024 SEC v. Jarkesy decision.

That denial leaves current Tax Court procedures in place, even as Murrin's case cements the IRS power to reach back indefinitely when preparer fraud is involved.