My advice to Andy is that the IRS is not barred from the assessment of additional income tax because the amount is substantial and the six-year limitation period has not been exceeded.
a) Andy should report the omission in his next tax returns and clearly explain how the inadvertent omission happened. The IRS normally expects Andy to keep records for 6 years for unreported taxable income, especially since the income is more than 25% of his prior gross income.
b) As the professional who prepared the tax returns for Andy, once the omission is discovered, I should advice Andy to report to the IRS. It is better to persuade him to self-report to lessen the penalty, instead of reporting directly to the IRS about the omission on Andy's prior tax return.
Thus, the three-year limitation period does not apply to substantial (25% and above) unreported income. The income must be reported to the IRS. Otherwise, the IRS will still find out during its matching process and impose substantial penalties.
Read more about omission of substantial gross income by a taxpayer at https://brainly.com/question/14895842
