United States v. Home Concrete & Supply, LLC

Holding: Section 6501(e)(1)(A) of the Internal Revenue Code, which extends the limitations period for the government to assess a deficiency against a taxpayer, does not apply when a taxpayer overstates the basis in property that he has sold, thereby understating the gain received from the sale.

Plain English Summary: The tax law gives the Internal Revenue Service (IRS) only a limited amount of time, known as a statute of limitations, to challenge a taxpayer"s statement on his tax return of the amount of tax that he owes. Ordinarily, that period is three years, but the law provides that it is six years in certain circumstances where it is unusually difficult for the IRS to determine that it has a disagreement with the taxpayer"s approach. In this case, the Court considered whether a particular situation " where the taxpayer has overstated its original cost of a piece of property " falls within the three-year category or instead within the six-year category. Adhering to the interpretation of the same language in an old Supreme Court decision involving a slightly different law, the Court held that the three-year statute of limitations applies. The result is that it is too late for the IRS to contest the tax liability of a large group of taxpayers that participated in certain similar deals and, according to the IRS, did not properly report the tax consequences of those deals.