Legal Question in Tax Law in Indiana

Statute of Limitations on filing Tax returns

In 1992 I won $7700 from the Indiana Lottery and earned an additional $3000 fromworking, however before the 1993 tax season I was sent to prison for ten years. Do I still have to file a return and pay the taxes or does the lenght of incarceration negate any taxes owed from either?


Asked on 12/16/02, 1:12 pm

2 Answers from Attorneys

Burton Haynes Burton J. Haynes, P.C.

Re: Statute of Limitations on filing Tax returns

The three year statute of limitations on the assessment of federal income taxes begins to run on the date the tax return is filed, with the result that when the relevant return is unfiled, the IRS can assess the tax forever (or as I like to tell clients “three years from never is a long time from now."). This being said, for its own administrative reasons the IRS will not insist on the filing of returns so old that even finding the blank forms would require a degree in archeology. Generally, the IRS will demand returns going back only six years, and managerial approval is required if an agent suggests that enforcement activity should be pursued for a period either less than or greater than this six year period.

The statute of limitations for criminal prosecution for willful failure to file a tax return (26 U.S.C. 7203) is six years from the due date of the unfiled return.

In light of the above, while in theory you should file your delinquent tax return for 1992 and make arrangements to pay, compromise, or discharge the tax, as a practical matter there is little reason to do so now. The IRS can no longer prosecute you for willful failure to file, and though it could still assess the tax (using its “substitute for return procedures”), it is not likely to do so after ten years.

If you want more information on this subject, see my article on “Healing Self-Inflicted Wounds – Representing Nonfilers,” written for publication by the Maryland Society of Accountants. It should be up in the next week or two on my website “BJHaynes.com.”

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Answered on 12/16/02, 1:54 pm
C. David DuMond Law Offices of David DuMond

Re: Statute of Limitations on filing Tax returns

I'm sure you have heard of the phrase, "Nothing is sure in life but death and taxes." If the revenue officers from Indiana or the federal government ever have any reason to crawl around in your past, then you will be exposed to the nuisance of dealing with the taxes and civil penalties (like interest and late filing fees) for the unreported income, because the time for reviewing a tax return doesn't begin until the return has been filed. I think the criminal statutes have a limitation period that has expired, five or ten years, but I don't practice criminal law, so watch it. It wouldn't be fair to charge you for that considering you were probably under severe distractions at the time and didn't mean to omit the filing. But who wants to rely on the sense of fairness of prosecuting officials? For your own interest, you might work up a 1992 tax return and see if you even owed any taxes. Maybe not. And you might want to consider whether filing a return would earn you any brownie points if you ever apply for a pardon.

Good luck.

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Answered on 12/16/02, 8:47 pm


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