42-2059. Additional audits or proposed assessments prohibited; exceptions

A. When the department completes an audit or the findings of a managed audit are accepted by the director or approved on appeal and a deficiency has been completely determined under section 42-1108 or chapter 1, article 6 of this title, the taxpayer's liability for the particular tax for the period subjected to the audit is fixed and determined, and an additional audit may not be conducted except under the following circumstances:

1. A taxpayer files a claim for refund under section 42-1251, subsection C or any other provision authorizing a claim for refund. Any departmental audit of the claim is limited to the issues presented on the claim for refund.

2. Changes or corrections are required to be reported to the department by section 43-327. The department may audit any such reports or any periods for which a report was required notwithstanding this section and may determine a tax deficiency or a refund.

3. If the taxpayer failed to disclose material information during the audit, or falsified books or records or otherwise engaged in an action that prevented the department from conducting an accurate audit, the applicability of this subsection may be part of a subsequent protest and may be contested by the taxpayer pursuant to chapter 1, article 6 of this title.

4. If a managed audit is completed under the terms of a limited managed audit agreement, the department may audit the issues not covered by the limited managed audit agreement within the statute of limitations prescribed by section 42-1104.

B. If the department issues a notice of proposed assessment of taxes imposed by chapter 5, article 1 or 4 of this title or title 43, chapter 10, the department may not increase the amount of the proposed assessment except in one or more of the following circumstances:

1. The taxpayer made a material misrepresentation of facts.

2. The taxpayer failed to disclose a material fact to the auditor.

3. The department requested information and the taxpayer fails to provide that information to the department.

4. After issuing the notice of proposed assessment but before the assessment becomes final the tax court, court of appeals or supreme court issues a decision, the application of which causes the tax initially proposed to increase.

C. Subsection B of this section does not apply to changes or corrections that are required to be reported to the department by section 43-327.