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February 08, 2017 The Tax Lawyer

On the Use and Abuse of Legislative History in the “Preparer Fraud” Doctrine

Volume 70, No. 1 - Fall 2016

Adam S. Wallwork


    For more than a century, U.S. tax evaders have been liable for unpaid tax at any time so that statutes of limitation do not stymie collection of fruits of fraud. Today, however, federal courts of appeal are split over a novel doctrine that holds unwitting victims of abusive tax professionals strictly and perpetually liable for their mistake of hiring an abusive tax professional. For eight years the Tax Court followed by the Second Circuit Court of Appeals have promulgated a new rule of tax assessment masquerading under an historical veneer that for the first time denies honest taxpayers the protection of the statute of limitations. The Federal Circuit has more recently rejected the doctrine of preparer fraud on statutory grounds but failed to provide the critical analysis of the statute’s legislative history which this article finally provides.

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