General rule
(a) Except as otherwise provided in this section, the amount of any internal revenue tax imposed by this subtitle or the Virgin Islands income tax law shall be assessed within 3 years after the return was filed (whether or not such return was filed on or after the date prescribed) or, if the tax is payable by stamp, within 3 years after such tax became due, and no proceeding in court without assessment for the collection of such tax shall be begun after the expiration of such period.
Time return deemed filed
(b)
(1) Early return. For purposes of this section, a return of internal revenue tax imposed by this subtitle or the Virgin Islands income tax law, filed before the last day prescribed by law or by regulations promulgated pursuant to law for the filing thereof, shall be considered as filed on such last day.
(2) Return executed by secretary. Notwithstanding the provisions of paragraph (2) of section 721(b) of this title, the execution of a return by the Director pursuant to the authority conferred by such section shall not start the running of the period of limitations on assessment and collection.
Exceptions
(c)
(1) False return. In the case of a false or fraudulent return with the intent to evade tax, the tax may be assessed, or a proceeding in court for collection of such tax may be begun without assessment, at any time.
(2) Willful attempt to evade tax. In case of a willful attempt in any manner to defeat or evade tax imposed by this subtitle, the tax may be assessed, or a proceeding in court for the collection of such tax may be begun without assessment, at any time.
(3) No return. In the case of failure to file a return, the tax may be assessed, or a proceeding in court for the collection of such tax may be begun without assessment, at any time.
(4) Extension by agreement. Where, before the expiration of the time prescribed in this section for the assessment of any internal revenue tax imposed by this subtitle or the Virgin Islands income tax law, both the Director and the taxpayer have consented in writing to its assessment after such time, the tax may be assessed at any time prior to the expiration of the period agreed upon. The period so agreed upon may be extended by the subsequent agreements in writing made before the expiration of the period previously agreed upon.
Request for prompt assessment
(d) Except as otherwise provided in subsection (c) of this section, in the case of any tax for which return is required in the case of a decedent, or by his estate during the period of administration, or by a corporation, the tax shall be assessed, and any proceeding in court without assessment for the collection of such tax shall be begun, within 18 months after written requests therefor (filed after the return is made and filed in such manner and such form as may be prescribed by regulations of the Director) by the executor, administrator, or other fiduciary representing the estate of such decedent, or by the corporation, but not after the expiration of 3 years after the return was filed. This subsection shall not apply in the case of a corporation unless—
(1) such written request notifies the Director that the corporation contemplates dissolution at or before the expiration of such 18-month period;
(2) the dissolution is in good faith begun before the expiration of such 18-month period; and
(3) the dissolution is completed.
Omission from gross income
(e) Except as otherwise provided in subsection (c) of this section, in the case of any tax imposed by the Virgin Islands income tax law—
(1) General rule. If the taxpayer omits from gross income an amount properly includible therein which is in excess of 25 percent of the amount of gross income stated in the return the tax may be assessed, or a proceeding in court for the collection of such tax may be begun without assessment, at any time within 6 years after the return was filed. For purposes of this paragraph—
(A) in the case of a trade or business, the term “gross income” means the total of the amounts received or accrued from the sale of goods or services (if such amounts are required to be shown on the return) prior to diminution by the cost of such sales or services; and
(B) in determining the amount omitted from gross income, there shall not be taken into account any amount which is omitted from gross income stated in the return if such amount is disclosed in the return, or in a statement attached to the return, in a manner adequate to apprise the Director of the nature and amount of such item.
(2) Constructive dividends. If the taxpayer omits from gross income an amount properly includible therein under section 551(b) of the Virgin Islands income tax law (relating to the inclusion in the gross income of Virgin Islands shareholders of their distributive shares of the undistributed foreign personal holding company income), the tax may be assessed, or a proceeding in court for the collection of such tax may be begun without assessment, at any time within 6 years after the return was filed.
Personal holding company tax
(f) If a corporation which is a personal holding company for any taxable year fails to file with its return under chapter 1 of the Virgin Islands income tax law for such year a schedule setting forth—
(1) the items of gross income, described in section 543(a) of the Virgin Islands income tax law, received by the corporation during such year; and
(2) the names and addresses of the individuals who owned, within the meaning of section 544 of the Virgin Islands income tax law (relating to rules for determining stock ownership), at any time during the last half of such year more than 50 percent in value of the outstanding capital stock of the corporation—
the personal holding company tax for such year may be assessed, or a proceeding in court for the collection of such tax may be begun without assessment, at any time within 6 years after the return for such year was filed.Certain income tax returns of corporations
(g)
(1) Trusts or partnerships. If a taxpayer determines in good faith that it is a trust or partnership and files a return as such under the Virgin Islands income tax law, and if such taxpayer is thereafter held to be a corporation for the taxable year for which the return is filed, such return shall be deemed the return of the corporation for purposes of this section.
(2) Exempt organizations. If a taxpayer determines in good faith that it is an exempt organization and files a return as such under section 733 of this title, and if such taxpayer is thereafter held to be a taxable corporation for the taxable year for which the return is filed, such return shall be deemed the return of the corporation for purposes of this section.