A taxpayer files their 2025 U.S. federal income tax return in April 2026 and omits from gross income an amount that exceeds 25% of the gross income actually stated on the return. Under IRC Section 6501, how long does the IRS have to assess additional tax on this return?
- Six years from the date the return was filed, rather than the general three-year period, because the omission exceeds the 25% threshold
- Three years from the date the return was filed, the same period that applies to any other return
- There is no statute of limitations once any omission of income is discovered, regardless of size
- One year from the date the omission is discovered, regardless of when the return was filed
Correct answer: A. Six years from the date the return was filed, rather than the general three-year period, because the omission exceeds the 25% threshold
IRC Section 6501 generally gives the IRS three years from the filing date to assess additional tax, but extends that period to six years when a taxpayer omits from gross income an amount properly includible that exceeds 25% of the gross income stated on the return, which is exactly the fact pattern described. The second option states the general rule but ignores the statutory exception that applies once the 25% omission threshold is met, which is the specific rule this scenario is testing. The third option is wrong because Section 6501 does not eliminate the limitations period entirely for large omissions — it extends the period to a defined six years rather than making assessment open-ended, and an unlimited period applies only in narrower situations such as a false or fraudulent return, not merely a large omission. The fourth option is wrong because the six-year period runs from the filing date of the return, not from whenever the IRS happens to discover the omission.
Source: Internal Revenue Code Section 6501; IRS 'Statutes of limitations for assessing, collecting and refunding tax'