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7.00 STATUTE OF LIMITATIONS
Updated September 2001
7.01 GENERALLY 7.01 Statutory Provisions 7.01 Limitations Periods for Common Tax Offenses 7.02 TRIGGERING OF STATUTE OF LIMITATIONS 7.02 Filing a False Tax Return 7.02[a] General Rule 7.02[b] Definition of Timely Filed 7.02 Failing to File a Tax Return 7.02 Tax Evasion 7.02 Conspiracy 7.03 TOLLING PROVISION: FUGITIVE OR OUTSIDE U.S. 7.04 COMPLAINT TO EXTEND STATUTE OF LIMITATIONS 7.05 SUSPENSION OF STATUTE: SUMMONS ENFORCEMENT 7.06 SUSPENSION OF STATUTE: OFFICIAL REQUEST FOR FOREIGN EVIDENCE
7.01 GENERALLY 7.01 Statutory Provisions This section gives a general overview of statute of limitations issues in criminal tax cases. For a more detailed discussion of a specific offense, reference should be made to the applicable chapter in this Manual. Section 6531 of Title 26 controls the statute of limitations periods for most criminal tax offenses. This statute provides: No person shall be prosecuted, tried, or punished for any of the various offenses arising under the internal revenue laws unless the indictment is found or the information instituted within 3 years next after the commission of the offense, except that the period of limitations shall be 6 years -- (1) for offenses involving the defrauding or attempting to defraud the United States or any agency thereof, whether by conspiracy or not, and in any manner; (2) for the offense of willfully attempting in any manner to evade or defeat any tax or the payment thereof; (3) for the offense of willfully aiding or assisting in, or procuring, counseling, or advising, the preparation or presentation under, or in connection with any matter arising under, the internal revenue laws, of a false or fraudulent return, affidavit, claim, or document (whether or not such falsity or fraud is with the knowledge or consent of the person authorized or required to present such return, affidavit, claim or document); (4) for the offense of willfully failing to pay any tax, or make any return (other than a return required under authority of part III of subchapter A of chapter 61) at the time or times required by law or regulations; (5) for offenses described in sections 7206(1) and 7207 (relating to false statements and fraudulent documents); (6) for the offense described in section 7212(a) (relating to intimidation of officers and employees of the United States); (7) for offenses described in section 7214(a) committed by officers and employees of the United States; and (8) for offenses arising under section 371 of Title 18 of the United States Code, where the object of the conspiracy is to attempt in any manner to evade or defeat any tax or the payment thereof. Thus, under section 6531, the general rule is that a three-year statute of limitations exists for Title 26 offenses. However, a six-year period applies to certain excepted offenses. Section 6531 switches back and forth between enumerating the exception by specific Code reference and by a description of the offense. For example, 26 U.S.C. §§ 7206(1), 7202, 7212(a) and 7214(a), and 18 U.S.C. § 371 (conspiracy to evade taxes), are all specifically designated by code section as falling within the six-year exception. Failure to file an income tax return and failure to pay a tax, 26 U.S.C. § 7203, however, are designated by description rather than code section. Generally, the statute of limitations begins to run when an offense is completed. Toussie v. United States, 397 U.S. 112, 115 (1970). Prosecutors should be aware that not all tax offenses are completed upon the filing of a tax return. For example, in a tax evasion case where the affirmative act of evasion is a subsequent false statement to IRS agents, the crime is completed at the time the false statement is made, not when the false return is filed. United States v. Goodyear, 649 F.2d 226 (4th Cir. 1981). Consequently, careful examination of the various elements is required to determine when a specific tax offense is completed. 7.01 Limitations Periods for Common Tax Offenses
Description of Code Section Statute of Code Section Offense Limitations Tax Evasion 26 U.S.C. § 7201 6 years 26 U.S.C. § 6531(2) Failure to 26 U.S.C. § 7202 6 years 26 U.S.C. § 6531(4) Collect, Account [FN1] For or Pay Over Failure to Pay 26 U.S.C. § 7203 6 years 26 U.S.C. § 6531(4) Tax Failure to File a 26 U.S.C. § 7203 6 years 26 U.S.C. § 6531(4) Return [FN2] Failure to Keep 26 U.S.C. § 7203 3 years 26 U.S.C. § 6531 Records Failure to Supply 26 U.S.C. § 7203 3 years 26 U.S.C. § 6531 Information Supply False 26 U.S.C. § 7205 3 years 26 U.S.C. § 6531 Withholding Exemption Certificate File False Tax 26 U.S.C. § 6 years 26 U.S.C. § 6531(5) Return 7206(1) Aid or Assist in 26 U.S.C. § 6 years 26 U.S.C. § 6531(3) Preparation of 7206(2) False Tax Return Deliver or 26 U.S.C. § 7207 6 years 26 U.S.C. § 6531(5) Disclose False Document Attempt to 26 U.S.C. § 6 years 26 U.S.C. § 6531(6) Interfere With 7212(a) [FN3] Administration of Internal Revenue Laws Conspiracy to 18 U.S.C. § 371 6 years 26 U.S.C. § 6531(8) Commit Tax Evasion Conspiracy to 18 U.S.C. § 371 6 years 26 U.S.C. § 6531(1) Defraud the Internal Revenue Service False Claim for 18 U.S.C. § 5 years 18 U.S.C. § 3282 Refund 286/287 False Statement 18 U.S.C. § 1001 5 years 18 U.S.C. § 3282
7.03 TOLLING PROVISION: FUGITIVE OR OUTSIDE U.S. Section 6531 of Title 26 contains its own tolling provision. The statute provides: The time during which the person committing any of the various offenses arising under the internal revenue laws is outside the United States or is a fugitive from justice within the meaning of section 3290 of Title 18 of the United States Code, shall not be taken as any part of the time limited by law for commencement of such proceedings. 26 U.S.C. § 6531 (1988). Thus, the statute of limitations in Title 26 cases can be tolled if the defendant is outside the United States or is a fugitive. "Outside the United States" and "fugitive from justice" are interpreted in the disjunctive. Mere absence from the United States without any intent to become a fugitive is sufficient to toll the statute of limitations. United States v. Marchant, 774 F.2d 888, 892 (8th Cir. 1985). For example, in Marchant, 774 F.2d at 892, the Eighth Circuit held that defendant's eleven-day health and pleasure trip to Switzerland tolled the statute of limitations under 26 U.S.C. § 6531. According to the court, under section 6531 persons are "outside the United States" whenever they cannot be served with criminal process within the jurisdiction of the United States under Rule 4(d)(2) of the Federal Rules of Criminal Procedure. Marchant, 774 F.2d at 892. The "fugitive from justice" clause in section 6531 refers to 18 U.S.C. § 3290. This statute provides: "No statute of limitations shall extend to any person fleeing from justice." The circuits are split as to the intent required under this statute. The District of Columbia and Eighth Circuits have held that mere absence from the jurisdiction, regardless of intent, is sufficient to toll the statute of limitations. In Re Assarsson, 687 F.2d 1157, 1162 (8th Cir. 1982); McGowen v. United States, 105 F.2d 791, 792 (D.C. Cir. 1939). The First, Second, Fifth, Sixth, Seventh and Ninth Circuits have held that intent to avoid arrest or prosecution must be proved before section 3290 applies. Brouse v. United States, 68 F.2d 294, 296 (1st Cir. 1933); Jhirad v. Ferrandina, 486 F.2d 442, 444-45 (2d Cir. 1973); Donnell v. United States, 229 F.2d 560, 563-65 (5th Cir. 1956); United States v. Greever, 134 F.3d 777, 780-81 (6th Cir. 1998); United States v. Marshall, 856 F.2d 896, 897-900 (7th Cir. 1988); United States v. Wazney, 529 F.2d 1287, 1289 (9th Cir. 1976).
7.04 COMPLAINT TO EXTEND STATUTE OF LIMITATIONS Section 6531 of Title 26 contains a mechanism for extension of the statute of limitations period. The statute provides: Where a complaint is instituted before a commissioner of the United States within the period above limited, the time shall be extended until the date which is 9 months after the date of the making of the complaint before the commissioner of the United States. 26 U.S.C. § 6531 (1988). Thus, the government may file a complaint within the limitations period and effectively extend the statute period nine months. However, section 6531 was not designed to grant the government greater time in which to make a case. Jaben v. United States, 381 U.S. 214, 219 (1965). Rather, it was intended to be used in situations where the government has made its case within the limitations period but cannot obtain an indictment within the limitations period because of the grand jury schedule. Jaben, 381 U.S. at 219-20. But see United States v. O'Neal, 834 F.2d 862, 865 (9th Cir. 1987) (investigation and case preparation need not cease upon filing of complaint; whether government improperly invoked extension is tested by sufficiency of the complaint at the preliminary hearing). In Jaben, the Supreme Court addressed the requirements for a valid complaint under section 6531. The Court held that a complaint must allege sufficient facts to support a probable cause finding that a tax crime has been committed by the defendant. Jaben, 381 U.S. at 220. Further, the government must fully comply with the complaint process and afford the defendant a preliminary hearing. 381 U.S. at 220. As a practical matter, a complaint should only be filed for the year in which the statute of limitations would otherwise expire. This procedure will not preclude development before the grand jury of counts for subsequent years in which the statute has not expired. Prosecutors should be aware, however, that the filing of a complaint may trigger the Speedy Trial Act as to the charge which is the subject of the complaint and, as a practical matter, may shorten the time within which the government can act on the remaining tax years under investigation. See 18 U.S.C. § 3161(b).
7.05 SUSPENSION OF STATUTE: SUMMONS ENFORCEMENT Section 7609(e)(1) of Title 26 provides for the suspension of the statute of limitations in certain types of summons enforcement proceedings. This statute provides: If any person takes any action as provided in subsection (b) [intervenes] and such person is the person with respect to whose liability the summons is issued (or is the agent, nominee, or other person acting under the direction or control of such person), then the running of any period of limitations . . . under section 6531 (relating to criminal prosecutions) with respect to such person shall be suspended for the period during which a proceeding, and appeals therein, with respect to the enforcement of such summons is pending. 26 U.S.C. § 7609(e)(1) (1988). It is beyond the scope of this Manual to treat in detail the nuances of summons enforcement proceedings. Any reliance on the suspension issue in this area requires a thorough analysis of section 7609, and particular care must be taken in measuring and documenting any period for which the statute of limitations is suspended.
7.06 SUSPENSION OF STATUTE: OFFICIAL REQUEST FOR FOREIGN EVIDENCE Criminal tax prosecutions increasingly involve the use of evidence obtained from foreign sources. Section 3292 of Title 18 provides for the suspension of the statute of limitations to permit the United States to obtain foreign evidence. This statute provides: (a)(1) Upon application of the United States, filed before return of an indictment, indicating that evidence of an offense is in a foreign country, the district court before which a grand jury is impaneled to investigate the offense shall suspend the running of the statue of limitations for the offense if the court finds by a preponderance of the evidence that an official request has been made for such evidence and it reasonably appears, or reasonably appeared at the time the request was made, that such evidence is, or was, in such foreign country. . . . . . (b) Except as provided in subsection (c) of this section, a period of suspension under this section shall begin on the date on which the official request is made and end on the date on which the foreign court or authority takes final action on the request. (c) the total of all periods of suspension under this section with respect to an offense-- (1) shall not exceed three years; and (2) shall not extend a period within which a criminal case must be initiated for more than six months if all foreign authorities take final action before such period would expire without regard to this section. 18 U.S.C. § 3292 (1988). Letters rogatory, requests under a treaty or convention, or any other request made by a court or law enforcement authority of the United States will qualify as an "official request." 18 U.S.C. § 3292(d). The statute does not require that the "request expressly list by citation the alleged statutory violations in order for a foreign evidence request to pass muster under 18 U.S.C. § 3292." United States v. Neill, 952 F.Supp. 831, 832 (D.D.C. 1996). While the maximum period for which the statute of limitations may be suspended for an offense is three years, the period begins to run when the government requests evidence from a foreign government. "[T]he starting point for tolling the limitations period is the official request for evidence, not the date the § 3292 motion is made or granted." United States v. Bischel, 61 F.3d 1429, 1434 (9th Cir. 1995). Likewise, the period ends when the foreign court or authority takes final action on the request. "'[F]inal action' for purposes of § 3292 means a dispositive response by the foreign sovereign to both the request for records and for a certificate of authenticity of those records." United States v. Bischel, 61 F.3d at 1434. The government's satisfaction with the evidence provided is not determinative of whether there has been a final action. "However, when the foreign government believes it has completed its engagement and communicates that belief to our government, that foreign government has taken a 'final action' for the purposes of § 3292(b)." United States v. Meador, 138 F.3d 986, 992 (5th Cir. 1998). Such a communication from a foreign government does not preclude further inquiry by the United States. "If dissatisfied with a dispositive response from a foreign authority, the prosecutor need only file another request and seek a further suspension of the limitations period, subject to the ultimate three-year limitation on the suspension period." United States v. Meador, 138 F.3d at 993 (footnote omitted). All requests for foreign evidence in criminal tax investigations should be coordinated with the Criminal Appeals & Tax Enforcement Policy Section, Tax Division, and the Office of International Affairs, Criminal Division. For further information on foreign evidence gathering in criminal tax cases, see Section 41.00 of this Manual.
FN1. There is a difference of opinion as to the limitations period for section 7202 offenses. The Second, Third, Ninth and Tenth Circuits hold that a six-year statute of limitations period applies. United States v. Evangelista, 122 F.3d 112, 119 (2d Cir. 1997) (reaff'g the holding of United States v. Mussacchia, 900 F.2d 493, 500 (2d Cir. 1990)); United States v. Gollapudi, 130 F.3d 66, 68-71 (3d Cir. 1997); United States v. Gilbert, No. 00-10314, 2001 WL 1111928 (9th Cir. Sept. 24, 2001); United States v. Porth, 426 F.2d 519, 521-22 (10th Cir. 1970). At least one district court has held that a three-year limitations period applies. United States v. Block, 497 F. Supp. 629, 630-32 (N.D. Ga.), aff'd, 660 F.2d 1086 (5th Cir. 1980). The Tax Division takes the position that the Second, Third, Ninth and Tenth Circuits are correct, and that the six-year limitations period under 26 U.S.C. § 6531(4) applies to section 7202. FN2. A number of exceptions exist to the six-year rule. Section 6531(4) exempts returns which are required to be filed under part III of subchapter A of chapter 61. Part III refers to information returns required to be filed under 26 U.S.C. §§ 6031-6060, and includes, for example, partnership returns, returns of exempt organizations, subchapter S returns, estate returns and trust returns. Part III also includes returns relating to cash received in trade or business (Form 8300). Reference should be made to these specific Code provisions for a more detailed discussion of applicable limitations periods. FN3. Section 7212(a) refers to two types of offenses: (1) impeding employees of the United States acting in an official capacity; and (2) impeding the administration of the Internal Revenue laws. The Tax Division believes the six-year limitations period applies to offenses under both prongs of section 7212(a) pursuant to 26 U.S.C. § 6531(6). Reference should be made to the discussion of this issue in the chapter dealing with Section 7212(a). See Chapter 17.00, infra. FN 4. The government technically is not required to prove that each member of the conspiracy committed an overt act within the statute period. However, in practice, the prosecutor should critically review those conspirators whose membership predates the limitations period, and be prepared to rebut a withdrawal defense coupled with a statute of limitations defense.