Tax Update: U.S. Supreme Court to Review Statute of Limitations Circuit Court Split

In two previous blog posts, we discussed the hot issue of whether an overstatement of basis triggers an extension of the three year statute of limitations for assessing tax.  The U.S. Court of Appeals for the Fourth Circuit, where our humble state resides, previously ruled in Home Concrete & Supply, LLC v. U.S. that a partnership’s overstatement of its basis did not constitute an “omission” subject to the six year statute of limitations for tax assessment.  The Fourth Circuit, along with the Federal and Ninth Circuits and the U.S. Tax Court all held that an overstatement of basis does not trigger the extended period of time to assess tax.  However, both the Fifth and Seventh Circuits found differently, providing that the six year statute of limitation does apply, resulting in a confusing circuit court split.  The circuit disparity primed the issue for arguments in front of the Supreme Court.

While petitions for certiorari were filed in connection with opinions of the Fourth, Seventh and Federal Circuits, the Supreme Court granted the petition relating to Home Concrete & Supply.  The government’s brief is due November 14, and the case will likely be heard early next year with an opinion issued by July.  We will keep you updated with the latest.