Transformative Technology and Shortening the Statute of Limitations Applicable to Taxpayers

When it comes to submitting tax returns and paying taxes, most taxpayers understand the nature of their civic duties and do so dutifully, if not willingly. However, many taxpayers fail to grasp why the IRS has such an elongated time period—namely, three years—to audit their tax returns and propose an assessment. Indeed, when the IRS exercises its oversight authority, records may no longer be available, and memories may be dulled.

Since the original institution of the three-year tax assessment limitations period nearly a century ago, tremendous technological strides have been made. Indeed, over ninety percent of income tax returns are currently electronically submitted. The IRS can readily employ AI and other detection modes to identify those tax returns requiring an audit. Given such technological advancements, Congress should shorten the general statute of limitations period to two years. Instituting this reform would yield many salutary benefits to the tax system at little or no revenue cost.