U.S. Supreme Court Weighs Statute of Limitations in Murrin Tax Fraud Case

(UNITED STATES) — The U.S. Supreme Court is considering whether the unlimited statute of limitations for fraudulent tax returns applies to innocent taxpayers whose returns were falsified by third-party preparers, a question now before the justices in Murrin v. Commissioner.

A petition for writ of certiorari filed on February 17, 2026, asks the court to review a 2025 ruling by the U.S. Court of Appeals for the Third Circuit in Murrin v. Commissioner, 158 F.4th 527 (3d Cir. 2025). That decision held that IRC § 6501(c)(1) lets the Internal Revenue Service assess taxes “at any time” for a false or fraudulent return with intent to evade tax, even when the fraud came solely from a preparer and not from the taxpayer.

The case could shape how far the IRS can reach into old returns. It also could settle a split among federal appeals courts over whether taxpayer intent must exist before the fraud exception wipes away the normal filing deadline.

At the center of the dispute is Stephanie Murrin, who hired preparer Duane Howell for tax years 1993-1999. Howell inserted false entries to evade tax, while Murrin signed the returns in good faith and without knowledge of the fraud.

The IRS sent Murrin a 2019 Notice of Deficiency, well beyond the normal three-year assessment period under IRC § 6501(a). The Third Circuit affirmed the Tax Court and applied the fraud exception without requiring taxpayer intent, allowing the government to assess taxes more than 20 years later.

That left Murrin facing a tax deficiency of approximately $65,000. Accrued interest exceeds $250,000.

The legal fight turns on a narrow but far-reaching issue: whether the unlimited statute of limitations for fraudulent returns applies when a return preparer commits the fraud without the taxpayer’s knowledge. In the Third Circuit, the answer was yes.

Elsewhere, the answer has been different. The Third Circuit’s reading conflicts with the Federal Circuit’s BASR Partnership decision, which requires taxpayer intent before the fraud exception can displace the ordinary limitations period.

That split matters because federal tax enforcement does not stop at circuit lines. A Supreme Court ruling could standardize the rule nationwide or leave different standards in place depending on where a taxpayer’s case arises.

Murrin’s petition argues that the Third Circuit created “perpetual liability” for taxpayers who did nothing wrong but relied on a dishonest preparer. In that view, the decision destroys repose by allowing audits and assessments decades after a return was filed, so long as the IRS later uncovers fraud by someone involved in preparing it.

For taxpayers, the statute of limitations often serves as the point at which an old tax year is closed. The question in Murrin v. Commissioner is whether that closure vanishes whenever a preparer, rather than the taxpayer, acted with fraudulent intent.

No Supreme Court decision or grant of certiorari had been announced as of April 6, 2026. Even without a ruling yet, the case has drawn attention because it reaches beyond one taxpayer and into the structure of fraud enforcement itself.

If the justices back the IRS and adopt the Third Circuit’s approach, the agency’s fraud exception would reach further. Old returns could remain open indefinitely when preparer fraud is found, regardless of whether the taxpayer knew anything about it.

That possibility carries practical consequences. The IRS could pursue aged liabilities long after records are lost, preparers are gone, and witnesses are unavailable, while interest continues to build over time.

A ruling for the government also could shape how other civil tax provisions are used. The 75% civil fraud penalty under IRC § 6663 is one example of the broader enforcement setting in which the case sits.

At the same time, the fraud penalty itself still requires proof. The standard is “clear and convincing evidence” of intent.

That distinction may become more prominent if the court draws a line between fraud that keeps a return open forever and fraud that supports a separate penalty. Even in a broader enforcement environment, intent remains central to some of the code’s harshest sanctions.

The case arrives as the IRS and the Justice Department continue to press tax fraud matters on several fronts in 2026. On March 6, 2026, the IRS updated its Dirty Dozen List and added abusive Form 2439 claims for undistributed long-term capital gains as a new scam.

IRS CEO Frank Bisignano warned at the time of evolving thief tactics. That warning fit a larger pattern of agency concern over changing fraud methods and the role of return preparers, promoters and false claims.

Enforcement has also focused on pandemic-era programs. The IRS and the Justice Department have been targeting PPP and ERC fraud, and a New Orleans preparer was indicted on March 5, 2026, for $2M COVID fraud.

Those cases are separate from Murrin, but they show the backdrop against which the justices are weighing the statute of limitations question. Federal tax authorities are pushing hard on fraud, and the court’s eventual answer could affect how long that push can extend into the past.

Technology is also part of that backdrop. AI flags “badges of fraud” such as lifestyle-income mismatches, a sign that old returns may attract new scrutiny through methods that were not available when they were filed.

That prospect heightens the stakes of the Supreme Court’s review. If fraud by a preparer is enough to suspend any time limit forever, new enforcement tools could be used to revisit tax years once thought closed, including years from decades ago.

A ruling for Murrin, by contrast, would bring the law closer to the Federal Circuit’s BASR Partnership approach. That would require taxpayer intent for the fraud exception to apply and would protect innocent taxpayers from open-ended exposure based on someone else’s misconduct.

Such an outcome would not end fraud enforcement. The IRS could still pursue fraudulent taxpayers, criminal conduct, and civil penalties where the legal standards are met, but it would not be able to use preparer fraud alone to keep every affected return open indefinitely.

The issue also comes at a time when the IRS is weighing changes to how it handles voluntary disclosure. On December 22, 2025, the agency proposed changes to the Voluntary Disclosure Practice, and comments closed on March 22, 2026.

Under those proposed changes, some amended returns would draw 20% accuracy penalties instead of the 75% fraud penalty. That proposal suggests the agency is also adjusting how it distinguishes among levels of culpability in tax noncompliance.

Murrin raises a related question from another angle. It asks whether a taxpayer’s lack of culpability matters at the threshold stage, when the government decides whether any deadline exists at all.

For tax professionals, the case speaks directly to reliance on preparers. Many taxpayers do not prepare their own returns and may not detect false entries, especially in older years when records are limited and the preparer controlled the filing process.

For the IRS, the question is how to prevent dishonest preparers from shielding fraudulent returns behind the normal statute of limitations. If the three-year period always applies unless the taxpayer personally intended fraud, some fraudulent returns could become untouchable once the deadline passes.

That tension runs through the competing approaches in the circuits. One side stresses finality for innocent taxpayers. The other stresses the government’s ability to assess tax on a fraudulent return whenever fraud is present, no matter who inserted it.

The Third Circuit came down on the latter side. By affirming the Tax Court and not requiring taxpayer intent, it gave the IRS a reading of IRC § 6501(c)(1) that reaches beyond the taxpayer’s own state of mind.

Murrin’s petition asks the Supreme Court to reject that reading. The filing argues that allowing preparer fraud alone to trigger the unlimited statute of limitations leaves blameless taxpayers exposed to assessments many years after they thought their filings were settled.

That debate carries more than doctrinal weight. In Murrin’s case, a deficiency of approximately $65,000 grew with accrued interest that exceeds $250,000, showing how old assessments can expand into much larger liabilities over time.

The justices now have before them a case that sits at the intersection of finality, fraud, and administrative power. Whether they take it or leave the split in place, Murrin v. Commissioner has already sharpened a question with consequences for taxpayers, preparers and the IRS alike.

If the court agrees to hear the case, it will decide whether the statute of limitations in fraud cases depends on who committed the fraud. If it does not, the split between the Third Circuit and the Federal Circuit will remain, leaving taxpayers in different parts of the country under different rules about when a tax year is truly closed.