The three-year statute of limitation does not apply if fraud occurs. Proving fraud is very difficult - it requires very strong evidence that the taxpayer deliberately and intentionally understated their taxable sales. The 25 percent fraud penalty may be added in accordance with section 144.500 . The statutes do not provide a statute of limitation for a non-filed period. Section 144.250 states that in order for the additions to tax to apply, there must be willful neglect.
Ordinary neglect is a different standard from willful neglect, and thus easier to prove.
The mere failure to file a return is not sufficient to establish neglect. The standard reason for extending the statute of limitation beyond three years is neglect to file a return. This is a lesser threshold and thus easier to establish than the standard for imposing 25 percent additions which is willful neglect. The standard reason to avoid a finding of neglect is reasonable prudence and good faith. Showing that the taxpayer sought and followed the advice of an authority such as a tax professional or the DOR can establish this.