Trump's taxes (an update): "Except in cases of fraud..."

In the preceding post, I stated that -- by law -- an IRS audit cannot last longer than 28 months. A reader begged to differ. I probably should not mention this reader's name, but he is well-known within certain circles.

His corrective to my post deserves to be noted here. My basic point stands: Trump's claim to be perpetually under audit is simply not credible. Here are my reader's words:

At http://cannonfire.blogspot.com/2019/04/the-tax-thing-i-have-plan.html, you wrote

“Twenty-eight months is the legal limit for any audit. Says so right here.”

There are exceptions, notably fraud.

Perhaps a reasonable suspicion of fraud is enough to extend the limit.

From https://taxes.uslegal.com/irs-audits/time-limits-for-the-irs/ [emphasis added:]

IRS auditors must complete audits within 28 months of the date the audited taxpayer filed the tax return, or by the date it was due, April 15, whichever is later. Actually, the law gives the IRS eight additional months after that (for a total of 36 months, or three years), but auditors need to leave at least eight months in which the IRS can process appeals... This three-year limit does not apply, however, if they underreported their income by more than 25 percent. In those cases, the IRS has six years in which to conduct an audit and assess additional taxes if they are warranted. There is no time limit at all for audits in cases where taxpayers file fraudulent returns...

Sometimes the IRS is not able to complete an audit within its three-year time limit. In such cases, the IRS may extend this time limit. Taxpayers do not have to agree to an extension, but the IRS can make the audit very unpleasant if they do not get an extension.

Similarly:

https://www.hrblock.com/tax-center/irs/audits-and-tax-notices/how-long-does-irs-have-to-audit/

Legal answer: Three years... Technically, except in cases of fraud or a back tax return, the IRS has three years from the date you filed your return (or April 15, whichever is later) to charge you (or, “assess”) additional taxes. This three-year timeframe is called the assessment statute of limitations.

Practical answer: 26 months... IRS agents should “strictly adhere to” this guideline, to make sure that the audit and other processing needs are complete within the three-year timeframe.

https://taxlawyeraz.com/irs-audit/irs-audit-how-long-does-it-tak/

Some exceptions exist to this rule...of course:

Exception One: If you have understated your income by more than 25% this 3 year deadline can be extended to 6 years.

Exception Two: If you filed a fraudulent return, there isn’t a time limit for the IRS to finish the assessment.

I searched and found those links because I could not find the 28-months limit on the page you linked to at nolo.com.

I apologize for the link that went wrong; I had reprinted a section from a much older post. Either I made a mistake long ago or the cited webpage has been changed. At any rate, this new information strongly indicates that the only reason for Trump to be under audit past 26 months is if the investigators found indications of fraud.

I'd love to see Trump's lawyers try to explain THAT.

We may have more luck if New York makes the state tax returns available to Congress. Needless to say, Trump's lawyers will sue the state of New York -- but if the suit comes after-the-fact, what of it? I don't see how Trump's lawyers can physically prevent the New York State Department of Taxation and Finance from complying with both state law and a congressional request.

So that approach seems promising. As I've said on previous occasions, "Think state."

Nevertheless, I continue to believe that it is important to get Trump's "I'm being audited" excuse on the record officially. If Congress places him in that situation, Trump will have but two choices: Either he will commit perjury or he will confess that he has lied to the public for years. I think he'll commit perjury.

Incidentally, Adam Schiff has said "No" to Michael Cohen, who had hoped to trade new information (documented) for a reduction in his sentence. I think that Schiff should play ball, or at least ask for a proffer.