KRS 141.210 — Auditing of returns -- Assessment of additional tax

(1) As soon as practicable after each return is received, the department shall examine
and audit it.
(2) (a) 1. If the amount of tax computed by the department is greater than the
amount returned by the taxpayer, the additional tax shall be assessed and
a notice of assessment mailed to the taxpayer by the department within
four (4) years from the date the return was filed, except as otherwise
provided in this subsection.
2. In the case of a failure to file a return or of a fraudulent return the
additional tax may be assessed at any time.
3. In the case of a return where a taxpayer other than a corporation
understates his net income or omits an amount properly includable in net
income or both which understatement or omission or both is in excess of
twenty-five pe rcent (25%) of the amount of net income stated in the
return the additional tax may be assessed at any time within six (6) years
after the return was filed.
4. In the case of a return where a corporation understates its taxable net
income or omits an amount properly includable in taxable net income or
both, which understatement or omission or both is in excess of twenty -
five percent (25%) of the amount of taxable net income stated in the
return, the additional tax may be assessed at any time within six (6)
years after the return was filed.
5. In the case of an assessment of additional tax relating directly to
adjustments resulting from a final federal adjustment, as defined in KRS
141.211, the additional tax may be assessed before the expiration of the
times provided in KRS 141.211.
6. In the case of the assessment of additional tax resulting from a decrease
of a net operating loss deduction or a capital loss deduction, resulting
from the carryback of a loss which occurs in a taxable year beginning
after December 31, 1993, the additional tax may be assessed at any time
before the expiration of the times provided for in this subsection for
assessing additional tax for the taxable year which resulted in the net
operating loss or capital loss carryback.
(b) The times provided in this subsection may be extended by agreement between
the taxpayer and the department.
(c) For the purposes of this subsection, a return filed before the last day
prescribed by law for filing the return shall be considered as filed on the l ast
day.
(d) Any extension granted for filing the return shall also be considered as
extending the last day prescribed by law for filing the return.
(3) If any additional tax is assessed on account of any income which has been returned
for taxation by any other taxpayer, the department, with the consent of the other
taxpayer, his personal representatives, or heirs, shall reduce the amount of the
additional tax assessed for each year by the amount of the income tax paid for that
year by the other taxpayer on account of the income in question.