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March 15, 2024
2024-0620

FY2025 budget proposes extending IRS statute of limitations on complex cases

In its FY 2025 Budget, released March 11, 2024, the Biden Administration proposes amending IRC Section 6501 to provide a six-year statute of limitations for taxpayers that omit more than $100 million from gross income on their return.

Under current law, IRC Section 6501 generally requires the IRS to assess tax within three years after a return is filed.

According to the Treasury Department's General Explanations of the Administration's Fiscal Year 2025 Revenue Proposals (i.e., the Green Book), extending the statute of limitations for complex cases would give the IRS greater flexibility in evaluating and staffing cases and allocating limited enforcement resources. "These considerations are especially acute for cases requiring the assistance of transfer pricing economists, as well as for cases involving the application of recently enacted statutory provisions to complex cross-border transactions," according to the Green Book.

Implications

The Administration's FY 2025 Budget proposal extending the general three-year statute of limitations to six years for a taxpayer that omits more than $100 million from gross income would be a change in the law that taxpayers must be mindful of, particularly in the event of an audit. It would not only give the IRS greater flexibility in evaluating a taxpayer's returns in the event of such an omission but highlights that the IRS recognizes that the factually intensive nature of large transfer pricing cases often take longer to audit.

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Contact Information

For additional information concerning this Alert, please contact:

National Tax Department, International Tax and Transactions Services, Transfer Pricing

Published by NTD’s Tax Technical Knowledge Services group; Andrea Ben-Yosef, legal editor
 

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