A Woman Bilked by Her Accountant Could Owe the IRS Nearly $330,000 After the Supreme Court Refused to Take Her Case

MW A woman bilked by her accountant could owe the IRS nearly $330,000 after the Supreme Court refused to take her case

Andrew Keshner

A bipartisan bill says this part of the tax code needs fixing

One fight over a big tax bill just took a dire new turn. The larger legal issue could still leave unsuspecting people exposed to audits years later.

A woman conned by her accountant decades ago is staring at a six-figure tax bill after the Supreme Court refused to hear her case.

For years, Stephanie Murrin has been fighting an Internal Revenue Service bill that's grown to approximately $330,000 - and her fight just took a dire new turn after the country's top court refused to get involved.

Her lawyer pledges to keep fighting and a bipartisan bill aims to amend the parts of the tax code at the crux of the case. Murrin's case highlights the pitfalls for people who unknowingly turn to unscrupulous tax professionals.

In the 1990s, Murrin and her husband used an accountant who cooked up bogus deductions and pocketed a share of the wrongly-inflated tax refunds. The man pleaded guilty to federal charges in 2007 and spent just over one year in prison.

The scheme stretched from 1992 to 2003, and involved numerous unknowing clients including Murrin, Southern District of New York prosecutors said.

Murrin didn't find out about her tax troubles until years later. In 2019, the IRS told Murrin she owed unpaid tax, penalties and interest for income-tax returns the crooked accountant filed from 1993 to 1999. She paid a big price for the time lag. Three-quarters of Murrin's debt came from interest on owed taxes and penalties, according to court papers filed earlier this month.

The IRS acknowledged Murrin didn't know what her accountant was doing all those years ago. But she still owed the money, government lawyers said.

The IRS usually has only a three-year window to start an audit once a return is filed. That timeline doesn't apply when there's fraud. Under the tax code's current wording, the IRS said it doesn't matter if it's the taxpayer who is trying to bilk the IRS or if it's a third party like an accountant.

Her lawyers argued the Supreme Court needed to hear the case so Murrin and millions of people like her wouldn't be blindsided by the IRS years after tax preparers took advantage of them.

Judges in Tax Court and the Third Circuit Court of Appeals ruled against Murrin. The Third Circuit judges said they understood Murrin's "frustration" but had to follow the law. As a last-ditch effort, Murrin's attorneys asked the Supreme Court to hear the case in February. The Supreme Court denied Murrin's petition on Monday.

Just as Murrin was trying to get the Supreme Court's attention, the top Republican and Democratic lawmakers in the Senate Finance Committee unveiled a bill to fix predicaments like the one Murrin faced.

The bill says the IRS doesn't have unlimited time to audit a taxpayer's return handled by an unscrupulous preparer. However, when taxpayers themselves commit fraud, the IRS will still be able to audit their returns anytime, the bill said.

The provision is one part of a broader bill from Sen. Mike Crapo, a Republican from Idaho leading the committee, and Sen. Ron Wyden of Oregon, the ranking Democrat.

"We are disappointed that the court declined review," Larry Sannicandro, an attorney for Murrin, told MarketWatch in a statement. "At the same time, we are encouraged that Congress can prevent similarly situated taxpayers from facing the same unfair result by enacting the Taxpayer Assistance and Service Act."

The breakdown of Murrin's bill was $65,318 in unpaid tax, accuracy-related penalties of $65,318 - and roughly $250,000 in estimated interest.

Sannicandro said Murrin's lawyers are still exploring the possible next move. That includes "potential relief under the pending legislation, procedural challenges to the interest component of the asserted balance, and any other available administrative avenues with the IRS."

The IRS did not immediately respond to a request for comment.

The Taxpayer Assistance and Service Act is a popular piece of legislation in the tax-preparation industry, said Rochelle Hodes of the accounting and advisory firm Crowe LLP.

It's possible the bill comes up for a vote in the lame-duck congressional session at the end of the year after midterm elections, she said. It's also possible certain provisions become standalone bills, like the provision that would help people like Murrin, said Hodes, a principal in the firm's Washington National Tax Services.

But right now, it seems like a tough time even for bipartisan legislation. On Wednesday, President Donald Trump abruptly called off a signing ceremony on a housing bill in order to force passage on a voting bill.

With many other to-do's on Capitol Hill and a short timeframe ahead of elections, Hodes said "this probably doesn't get to the top of the pile."

-Andrew Keshner

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June 25, 2026 08:00 ET (12:00 GMT)

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