An appeals court has decided that an accountant’s fraud will not hinder the IRS in their efforts to go after a taxpayer in their unpaid taxes. In fact, the agency has unlimited time to assess the taxes.
A firm had past due payroll taxes and hired an accountant to negotiate on their behalf with the IRS. The firm actually gave the accountant the paper 941 forms and checks made payable to the IRS. The accountant actually embezzled the funds and prepared and filed with the IRS a separate set of fraudulent 941 forms, unknown to the company. The court ruled that for tax purposes, the accountant’s filing of false returns is attributed to the client so the three year statute of limitations does not apply.