Stephanie Murrin signed her 1993 tax return in good faith. Her preparer, Duane Howell, placed false entries on it. She did not know, and the IRS later stipulated she had no intent to evade tax. She signed her returns through 1999 the same way.
In 2019, twenty years after the last return in the period, the IRS issued her a Notice of Deficiency. In 2024, the Tax Court ruled against her. In 2025, the Third Circuit affirmed. In February 2026, she petitioned the Supreme Court for review. As of this writing, the petition is pending.
The underlying assessment is roughly $65,000. The accrued interest exceeds $250,000. Total exposure is over $315,000 on returns filed when the youngest reader of this article was in middle school.
This article is not about whether she wins
The Supreme Court may grant cert or deny it. If granted, it may rule for Murrin or for the Commissioner. The outcome matters enormously to Stephanie Murrin. It matters far less to the argument I want to make.
The costs Murrin has absorbed since 2019 do not depend on how the case ends. They are paid in currencies the case will never refund.
Seven years of attention pulled toward an exposure she did not create and cannot resolve through ordinary diligence. Seven years of sleep affected by an obligation whose magnitude grows with interest while she waits. Attorney fees through Tax Court. Additional fees through the Third Circuit. Cert petition costs at the Supreme Court. Expert witnesses where required. Records reconstruction on returns filed before most current tax software existed. The ordinary opportunity cost of every hour, every dollar, and every unit of mental capacity that went to defending old returns instead of building current ones.
If the Supreme Court rules in her favor tomorrow, she does not get those seven years back. She gets the next chapter back. The seven years are spent.
That is the part of the case I want to talk about, because that is the part of the case that is not unique to her.
What the three-year statute was supposed to do
Section 6501(a) of the Internal Revenue Code gives the IRS three years from the filing of a return to assess additional tax. That rule has a name in tax administration: repose. It is the legal mechanism that allows a taxpayer to stop carrying a return as an open question and begin treating it as closed.
Repose is not a technicality. It is the structural feature that makes financial planning possible. A practice owner who could never close a tax year could never deploy capital with confidence, never make a long-horizon decision without reserving against an undefined liability, never look at last year’s return as anything other than a contingent claim against next year’s cash.
Section 6501(c)(1) carves an exception. If a return is false or fraudulent with intent to evade tax, the IRS can assess at any time. Until recently, most practitioners read that exception as requiring the taxpayer’s intent. The Federal Circuit’s decision in BASR Partnership supported that reading. The Tax Court, the Eleventh Circuit, and now the Third Circuit have read it differently. Under the Third Circuit’s reading, the intent of anyone who participated in preparing the return is enough to keep the assessment window open forever.
Whatever the Supreme Court ultimately decides, two things are already true. First, in the Third Circuit, the assessment window on any return touched by a preparer with fraudulent intent is open indefinitely, regardless of what the taxpayer knew. Second, in every circuit, the question of which rule applies has been opened in a way it had not been before. The practice owner who relied on the three-year statute as a fixed structural feature of their financial position now relies on it as a contingent feature, conditional on facts they cannot directly verify about people they may no longer employ.
The costs in the chart above are not hypothetical and they are not contingent on a terminal event. Attention load and opportunity cost begin at filing. Decision drag follows once the unexamined position starts shaping subsequent capital and contract choices. Records degradation and preparer continuity risk activate as the window stays open and time does what time does to documentation and to firms. None of these layers turns off at Year 3 if the window does not actually close at Year 3. They keep accruing.
The cost is being paid now, by people who do not know they are paying it
Stephanie Murrin is paying her cost visibly. The cost has a docket number. The amount accruing in interest is computable to the dollar.
Most practice owners with preparer history are paying a different version of the same cost in invisible form. The exposure window on their old returns is conditional on facts they have never investigated. They have not investigated because the cost of investigation feels high and the cost of not investigating feels like zero. The cost of not investigating is not zero. It is the layered, persistent load mapped in the chart above, paid in quarterly increments of small inattention, in capital decisions deferred or sized down, in payer negotiations entered with one eye on a position the practice owner cannot fully see.
That cost compounds the same way interest compounds. The terminal event, if it ever arrives, is the visible version. The invisible version is being paid right now.
The structural problem with reducing this cost through one’s tax preparer is that the preparer is the source of the exposure being carried. A preparer asked to evaluate the risk that they or a predecessor put fraudulent entries on a return is being asked to perform an audit of themselves or someone whose work product they are professionally and economically inclined to defend. The role conflict is not malicious. It is structural. The same person who has the technical knowledge to read the return for risk is the person whose interests are most aligned with the conclusion that no risk exists.
Reducing the cost requires a role whose function is structurally separate from preparation. A role whose compensation does not depend on the conclusion. A role whose practice is to hold the tax position as a continuously revisable object of attention, not as a closed file.
That is what Strategic Financial Leadership is. It is not a service that reviews tax returns. It is a governance function for a standing financial position, of which the tax exposure on prior years is one component. The practice owner does not buy protection against a Murrin outcome, because no one can sell that. The practice owner buys reduction of the standing cost of carrying unexamined exposure, by paying a defined fee for a function that converts diffuse, unbounded attentional cost into specific, governed attention performed by someone whose role is to perform it.
The question worth sitting with
Stephanie Murrin’s $315,000 of pending exposure is real. The seven years of carrying cost she has already paid are also real. The Supreme Court will decide the first. The second is settled, regardless of what they decide.
Every practice owner reading this article has a portfolio of prior-year returns. Some were prepared by the practice owner’s current firm. Some were prepared by firms the practice owner no longer uses. Some were prepared by individuals the practice owner has lost contact with entirely. The exposure profile of that portfolio is not a function of the practice owner’s intent. It is a function of facts the practice owner has not investigated and may not be positioned to investigate alone.
The question most owners ask: “Could what happened to Stephanie Murrin happen to me?”
The harder question: “What am I already paying, in attention and capacity and deferred decisions, to carry an exposure I have never priced?”
The math makes the costs visible. My help makes what comes next possible.
Scott Fleming, CPA, MBA, leads The Medical CFO and serves as fractional CFO to multi-provider medical, dental, and veterinary practices in the $2M to $10M revenue range. Reach him at scott@seflemingcpa.com or seflemingcpa.com.
