Some Info On IRS Audits Statute Of Limitations

IRS audit statute of limitations

                 Statute of limitations for IRS audits

Every year, the Internal Revenue Service or the IRS examines or audits thousands of returns to substantiate the information provided in the tax returns. The returns that are audited are selected either via computer algorithms or they may be selected based on some income information that was received subsequent to filing the tax return. Even though the IRS is authorized to ensure the accuracy of the returns, there are certain rules that restrict the period within which the agency can take action. Read on to understand the various aspects about the IRS audits and its statute of limitations.

The facts

The IRS audit statute of limitations for tax returns is three years and for collecting owed taxes is ten years. The statute of limitations starts on April 15 for tax returns filed before the April 15 deadline and for returns that are filed after the April 15 deadline, the statute of limitations starts from the date on which it was filed.


For taxpayers who file a fraudulent return or a false return, the three-year IRS audit statute of limitations is not applicable. Besides, unfiled returns may be assessed tax or alternatively, the taxpayer can be taken to court to collect tax prior to assessment.


The IRS may request you to extend your statute of limitations for a tax assessment that was the result of an audit in certain situations. For instance, IRS may ask taxpayers who request a Partial Payment Installment Agreement to sign a waiver in order to extend the statute in return for a deduction in their monthly repayment amount.

Appeal rights

Taxpayers are entitled to appeal any tax collection or tax assessment within 30 days of the assessment. Taxpayers can choose either a Collection Due Process (CDP) hearing or a Collection Appeals Program (CAP) hearing. Either you can download forms online or you can request it via mail.


Tax returns

                  Statute of limitations for tax returns

Taxpayers who ignore the audit determination while they are within the statute of limitations may be assessed either a lien or a levy on their property. A levy is a legal seizure of your property while a lien only secures the IRS’ interest in your property against that of other creditors.

That was some information regarding the IRS audits. Consult your accountant or an experienced attorney for a better understanding. For more info on the same, refer online legal resources.

Know More About IRS Audit Statute Of Limitations

IRS Audit statute of limitations

                  Statute of limitations for tax audit

The Internal Revenue Service (IRS), which is a government agency, is responsible for tax collection and tax law enforcement in the United States. They conduct reviews called the IRS audits on the financial information provided by organizations and individuals. This is to ensure that the information they provide is reported correctly as per the tax laws and the tax amount is accurate. The IRS has the authority to look into the history of accounts too if required.

IRS Audit statute of limitations

The statute of limitations for an IRS audit depends upon the circumstances of tax return. How far they go back and audit really depends upon this factor. Usually, the IRS won’t go back more than three years to audit unless they find something really wrong with the numbers. The statute of limitations begins from the original due date of tax return or the date of filing the federal tax return, whichever is later. As a general rule, the IRS has three years to audit your tax return, three years to process refund of tax and ten years to collect taxes which are due. When considered from the government’s perspective, the statute of limitations places restrictions on the taxpayer’s right to claim a refund of tax. And from the taxpayer’s perspective, this restricts the IRS from collecting any deficit taxes that were originally paid.

Exceptions to the statute of limitations

An amended tax return does not extend the audit period in majority of the cases because it is something that you may have filed at a later stage as a correction to the original tax return. However, there can be exceptions to this. One such exception to the IRS audit statute of limitations is filing an amended tax return during the last 60 days of the open period. Another exception is when you fail to report a tax return of 25 percent or more on your total gross income. In such cases, the statute of limitations for tax audit extends to six years from the due date or the date of filing the tax return, whichever comes later. Tax fraud or tax evasion too can extend the audit period to six years as it is considered legal offenses.

IRS audits

                  Statute of limitations – exceptions

Sometimes the IRS may not be able to complete the audit before the statute of limitations expires. In such cases, the IRS can request an extension to perform the audit, but only with the consent of the taxpayer. The consent agreement may or may not specify the date on which the audit has to be completed. However, the taxpayer has the right whether to agree to the extension or not.

Some Info About IRS Audits

IRS Audit statute of limitations

                                   IRS tax audits

The Internal Revenue Service (IRS) can request an audit anytime during a period of three years from the date of taxpayer’s return. The IRS can demand the tax records for the last six years if considerable tax mistakes are found.


The taxpayers that IRS will audit are selected using a software program making use of parameters that will identify the high-risk taxpayers who have a probability of underpaying their taxes. This software will determine which citizens pay their taxes properly and who do not.

IRS audit location

The IRS can perform the audits either through mail or in person. If mailing the receipts and tax records are an arduous task, then tax payers can request the IRS to conduct an in person audit. In person audits may be performed either at your office or at your personal residence. Generally, this is done in your office where the tax records are maintained. In case the IRS requires additional information such as proof of income or receipt of payment of expenses, taxpayers will be notified of it well in advance.

IRS audit statute of limitations:

As per IRS recommendations, taxpayers are advised to maintain personal tax information and records for six years, starting from the date on which it was filed. Additionally, business tax returns should be retained for the period of transaction plus another three years. Usually, after a tax return is filed, the IRS attempts to schedule an audit at the earliest possible date. The IRS statute of limitations for collecting tax liabilities is ten-year duration from the date on which it was filed. Prior to implementing the new regulations, the IRS requested extensions from taxpayers to extend this period of limitations. These extensions can no longer be used for tolling purposes.


Internal Revenue Service

                  Statute of limitations for IRS audits

Individuals can deny the IRS’ request to extend the IRS audit statute of limitations, but in such a case, the IRS will prepare the final audit determinations based on incomplete tax information.

These are some aspects regarding the IRS tax audits and their statute of limitations. Tax laws undergo a constant change and so it would be best to consult your accountant and talk to an experienced attorney or a competent tax professional to assist you through the audits. You can also go through online legal resources to know the present laws.

All About IRS Audit Regulations

IRS Audit statute of limitations

            What is the IRS audit statue of limitations

Citizens who are considered as a high risk for underpaying their respective taxes are monitored using a computer software program by the IRS or the Internal Revenue System. This software can tell who is paying their tax properly and who is not. Read on to find out more about the IRS audit regulations.

Audit selection:

Filing an amended return merely will not start an audit investigation. However, filing this will subject these returns to an initial audit screening process and the amended returns may be selected for IRS audit. The IRS employs the ‘National Research Program’ to filter all tax payer returns initially and the returns are then selected. Based upon the IRS’s specific criteria to decide which returns may result in adjustment upon an audit, this program selects returns for audit using a baseline return.

The computer selected taxpayer’s returns are initially assessed by an IRS auditor. It is up to the auditor to decide if the return can be accepted as it is or if it has to be investigated further by audit examiners. A final decision regarding whether the return can be passed on for acceptance or if it requires a follow-up is in the hands of the audit examiner.

IRS audit location:

Audits can be performed in person anywhere that you keep your tax records from your place of business, a local office or even your place of residence or it can even be conducted by mail. The IRS will inform you in case it requires any additional tax information such as a receipt evidencing payment of expenses or proof of income. If the audit is conducted in your office, then it will occur where you maintain your accounting books.

Record Retention requirements:

As a general rule, the tax records should be maintained during the entire period of the business transaction with the addition of another extra three years. As per IRC recommendations, taxpayers are required to maintain payroll records for a minimum of six years at least. During an audit, IRS has the authority to evaluate tax returns for the previous three years. However, if substantial mistakes are found, the IRS can extend this review period. But in no case will it include tax returns more than six tax years old.

IRS audit statute of limitations:

IRS auditor

                          Conducting an IRS audit

The IRS audit rules also include provisions for statute of limitations. The IRS may request the tax payers to allow extra time for the purpose of statute of limitations. The IRS also conforms to refund deadlines. If you have reasons to believe that the statute of limitations applicable has been surpassed in favor of IRS, then your accountant or tax attorney should thoroughly review the ‘Publication 1035, Extending the Tax Assessment Period.’

That was some information regarding IRS audit selection, location and the IRS audit statute of limitations. For more information on this topic, consult your accountant or your tax attorney.

Heavy Penalties For Tax Evasion Charges

IRS audit statute of limitations, additional tax

Statute of limitations for unreported income

Forgot to add an extra income on your tax return? You may not be asked to pay up by the IRS immediately, but do not be surprised to see a mail from them intimating about penalties some eight or nine years later.

It is very important to add every income to your tax return as otherwise it might result in tax evasion charges from the IRS.

IRS audit statute of limitations

It is the time period allotted to the IRS within which the agency has to resolve any problems with a tax account. After this time period, the tax payer with whose account the agency has found discrepancies will not be liable to face any charges from the agency. Some exceptions do exist, such as, if the amount involved were to be higher than a certain amount, then the IRS can take a longer time period than the stipulated IRS audit statute of limitations.

Otherwise, the usual time period allotted for the IRS to come up with sufficient evidences to show that the person has been evading taxes is 10 years for collection and three years for assessment. It means that the IRS has got 3 years to assess the additional tax from the date of filing the tax return and 10 years to collect the tax owed by the person from the date of assessment.

Exceptions to the statute of limitations

As mentioned earlier in this article, this statute of limitations is also subjected to some exceptions, as different situations demand different set of rules. If the person accused of evading taxes is responsible for an understatement of more than 25 percent of the gross income given on the tax return, then the IRS has got six years to assess the additional tax owed by that person from the time the return was filed.

IRS audit statute of limitations, additional tax

IRS statute of limitations

Penalties and interest

Penalties and interest are calculated by the IRS if it finds discrepancies in the reported income. Unreported income will warrant the payment of penalties by the tax payer and the most common penalty awarded is one half of 1 percent for each month the tax is unpaid on the unreported income.

IRS might take some time, even years, in some cases to find out if there are any unreported incomes in the tax returns of a person. Therefore, even if you think you managed to escape from IRS, the relief might be short-lived.