Opinion ID: 765233
Heading Depth: 2
Heading Rank: 2

Heading: The New Government Theory

Text: 13 According to the government, the Cotlers filed fraudulent returns from 1972 through 1979, and therefore, there is no limitations period prohibiting, and here nothing else prohibits, a collection action for the underpaid tax for the 1972 through 1979 tax years in 1990.The government's argument relies on the portion of 26 U.S.C. §6501 (c)(1) 5 which provides that in the case of a false or fraudulent return with the intent to evade tax . . . a proceeding in court for the collection of such tax may be begun without assessment, at any time.See Lowy v. Comm'r, 288 F.2d 517, 519-20 (2d Cir. 1961). 14 The government argues that, as the returns were fraudulent, collection actions can be begun any time. In lieu of proving fraud, however, the government asserts that the taxpayers stipulated in the Tax Court that fraud penalties under 26 U.S.C. §6653(b) applied to each of the years 1972 through 1979, and that these penalties can only apply where the underpayment of tax on the return is due to fraud. The government argues, moreover, that reliance on the fraud exception to the statute of limitations was raised by the government in the district court, although not mentioned, much less relied upon by the district court, in its opinion.