Murrin and the Unlimited Assessment Clock: What Practitioners Must Know Now

A Supreme Court certiorari denial on June 22, 2026, left a significant Third Circuit ruling intact: a tax preparer's fraud, with no wrongdoing by the client, is enough to suspend the normal three-year assessment period under Section 6501(c)(1) of the Internal Revenue Code indefinitely. For accounting firms advising clients with older returns or questionable preparer history, the implications are immediate and practical.

The Murrin Case: What Happened

Facts the Tax Court found

Stephanie Murrin filed joint returns with her then-husband for tax years 1993 through 1999. The returns were prepared by Duane Howell, who also handled filings for two partnerships in which she was a general partner. Howell's professional record was serious: he held a suspended CPA license, had a prior federal conviction in New York for preparing fraudulent returns for other taxpayers, and entered a guilty plea in 2007 arising from a broader return-preparation fraud scheme. The Tax Court found as a matter of fact that Howell placed false entries on the Murrins' returns with intent to evade tax. The Murrins, by contrast, did not supply false information and did not intend to evade tax.

The size of the bill

The IRS issued a notice of deficiency in 2019, roughly two decades after the last return in question was filed. The parties stipulated to $65,318 in underpayments and $13,064 in accuracy-related penalties. Because of the decades that had elapsed, the Third Circuit noted that Murrin faced an estimated $250,000 in interest, putting total estimated exposure above $328,000. Interest had become the dominant component of the liability, not the underlying tax.

The Statutory Question and How the Courts Answered It

What Section 6501(c)(1) actually says

As a baseline, Section 6501(a) gives the IRS three years from the date a return is filed to assess tax. Section 6501(c)(1) removes that ceiling entirely in the case of a false or fraudulent return filed with intent to evade tax. Murrin's argument was narrow and serious: the intent should be hers, not her preparer's, because she was the taxpayer. She did not commit fraud and should not bear an unlimited assessment window for someone else's conduct.

Both the Tax Court and the Third Circuit rejected that argument. The Third Circuit's analysis was principally textual. Section 6501(c)(1) does not refer to the taxpayer's intent. It refers to a false or fraudulent return with the intent to evade tax. The court held that the statute focuses on the character of the return, not on which party harbored the fraudulent intent. The court drew support from a Supreme Court bankruptcy decision explaining that passive-voice statutory drafting can remove the actor from the legal test and focus instead on what occurred. The court also relied on prior precedent holding that the phrase "at any time" in Section 6501(c)(1) operates broadly and that a later disclosure does not restore the three-year window once a fraudulent return has been filed.

Where the circuits disagree

The Third Circuit's holding is not universally shared. The Federal Circuit, in the BASR litigation, reached a materially different conclusion: Section 6501(c)(1) suspends the three-year period only when the IRS establishes that the taxpayer acted with intent to evade tax. The BASR opinions were fractured, but the taxpayer-intent rule survives in that court. The Supreme Court's denial of certiorari in Murrin did not resolve that split. It hardened it.

Practitioners should understand what a certiorari denial is and is not. The Supreme Court expressed no view on the merits. The denial leaves the Third Circuit judgment intact and the Tax Court's existing line of cases undisturbed, but it carries no precedential weight on the substantive question.

Which Clients and Which Courts Are Affected

Binding and persuasive reach

Murrin is binding precedent for cases appealable to the Third Circuit: Delaware, New Jersey, Pennsylvania, and, where relevant, the U.S. Virgin Islands. Outside those jurisdictions, it is persuasive authority. In the Tax Court, the government's reading controls unless a contrary appellate decision is controlling in the relevant circuit. In the Federal Circuit, the BASR taxpayer-intent rule remains operative.

The practical obstacle to the Federal Circuit route

Reaching the Federal Circuit generally requires a taxpayer to pay the full assessment, file an administrative refund claim, and then sue in the Court of Federal Claims. A refund suit filed in federal district court goes to the regional circuit, not the Federal Circuit. For a client facing a combined bill of tax, penalties, and decades of accumulated interest, paying first to litigate later is often financially impossible. The more favorable forum is frequently unreachable.

That practical asymmetry is relevant context when you read about IRS data-sharing governance gaps flagged by TIGTA, where access to taxpayer information by multiple parties raises its own set of procedural exposure questions.

Practitioner Obligations After Murrin

Do not concede fraud on the facts alone

A suspended license, a criminal history, or sloppy work by a preparer is a red flag. It is also critical evidence in a Section 6501(c)(1) dispute. It does not, by itself, open the assessment period. The trigger is a false or fraudulent return filed with intent to evade tax. The IRS must prove more than error and more than negligence. A careless preparer is not automatically a fraudulent one. Errors, even significant ones, do not automatically qualify. An innocent client may retain factual defenses to the unlimited statute even after Murrin, particularly if the government cannot meet its evidentiary burden on intent.

Keep penalty defenses separate from the assessment question

Section 6664(c)(1) permits a taxpayer to avoid accuracy-related penalties under Sections 6662 and 6663 by demonstrating reasonable cause and good faith. A client who relied on a preparer in good faith has a real argument here. That argument addresses the penalty, not the underlying tax liability, and it does not close the assessment window. Practitioners need to present both analyses to clients without conflating them.

Vet the preparer, not just the return

Before relying on prior-year work or advising on an existing filing position, confirm who prepared the relevant returns and whether that person was in good standing at the time. Check license status. Search for disciplinary actions, IRS preparer penalties, injunctions, and any criminal proceedings. A suspended license or prior conviction is not background noise in a Section 6501(c)(1) analysis. It may be the fact that converts what looks like a closed year into an active assessment risk.

This kind of preparer-level due diligence parallels the file-level scrutiny discussed in our piece on IRS CP53E notice errors and what accounting firms need to know, where verifying underlying process matters as much as reviewing the notice itself.

Adjust retention schedules where a questionable preparer touched the file

Standard document retention schedules assume a closed assessment period. For returns prepared by someone later connected to fraudulent activity, normal retention logic does not apply. Where the dollar exposure is material, preserve the file indefinitely. That means engagement letters, source documents, client organizers, signed e-file authorizations, and any evidence of the preparer's credentials at the time of filing. The goal is to reconstruct what the client provided, what the client knew, and why reliance on that preparer was reasonable.

Build a contemporaneous reasonable-cause record

Reasonable cause is considerably easier to demonstrate when a contemporaneous record exists. Document why a preparer was selected, what credentials were verified, what documents were provided, and what questions were asked. If no warning signs were visible at the time, document that too. Waiting until a notice arrives to reconstruct good faith is a losing strategy.

Raise preparer history in due diligence

In business acquisitions, partnership admissions, and similar transactions, the party acquiring an interest also acquires the assessment risk that attaches to prior returns. If those returns were prepared by someone with a problematic history, Section 6501(c)(1) exposure should be surfaced, quantified, and addressed in representations, warranties, or escrow arrangements. Treating preparer background as a routine administrative check rather than a tax risk item is a gap that Murrin makes harder to justify.

What Comes Next

The circuit split between the Third Circuit and the Federal Circuit remains open. Congress could resolve it by amending Section 6501(c)(1) to tie the unlimited period to the taxpayer's own intent, or to the intent of the taxpayer and their authorized agents only. Until that happens, or until the Supreme Court takes a case squarely presenting the question, practitioners must advise based on the law as it stands in the relevant forum. For clients in Delaware, New Jersey, and Pennsylvania, that means Murrin controls. For everyone else, the question is open, but the government's position is the baseline in the Tax Court.

Source: Accounting Today