Is There a Statute of Limitations on IRS Audits?
The changes of getting audited by the Internal Revenue Service (IRS) are actually quite low. The bottom line is that if you make less than $200,000 a year, you only have about a 1% chance of receiving an audit notice from the government. That means that you have a 99% chance of NOT being audited. In general, the IRS completes audits as soon as possible after returns are filed. However, there are times when this does not happen and an audit is not pursued by the IRS for an extended period of time. The statute of limitations can really be an important factor when it comes to dealing with the IRS after time has passed.
What Is IRS Statute of Limitations?
Before understanding IRS statute of limitations further, let’s learn what it is. IRS has a limited time period to assess, refund, credit, and collect taxes. These limits are called as the Statutes of Limitations. When this time period expires, the IRS can no longer assess addtional tax. It neither allow a claim for refund by tax payers nor take collection action.
How Far Back Can The IRS Audit You?
Generally speaking, the primary statute of limitations for the IRS to notify you of an audit is three years. You should be aware, however, that there are many exceptions to this rule, and the IRS may have MORE than three years, depending on your unique circumstances. In fact, many exceptions give the IRS up to six years to send notice of their intention to perform an audit.
Here are a few of the most common reasons that the IRS can take more than 3 years:
- Filing an extension actually increases the amount of time that that IRS has to initiate an audit. So, if you request an extension this year until October, the IRS will have until October 2021 to initiate an audit.
- The three-year statute of limitation is doubled to six years if the IRS discovers that a taxpayer has omitted an amount from gross income that exceeds 25% of the stated gross income.
- There is no statute of limitations when an audit pertains to the assessment of tax if a return is false or fraudulent, reflects a willful attempt to evade taxation or when no tax return at all is filed. The IRS can audit you at any time if they suspect a fraudulent return or if you did not file at all.
Keep in mind that not all audits automatically mean that there is a problem with your tax return. The IRS conducts random audits and may only require you to submit very specific paperwork regarding your return. Additionally, you should keep in mind that if the IRS wants to audit your return, they will notify you by mail. The IRS will not initiate an audit by calling or emailing you. If you receive phone or email notifications, this is likely a scam and you should report it.
Professional Audit Support
If you have received a notice from the IRS and have questions about the documents you should provide and whether the audit is within the statute of limitations, Success Tax Relief can help. Our team can provide audit support and guide you through the entire process so that you can feel confident that you are responding appropriately to the IRS. Call us at 877-825-1179 with any audit-related questions or contact us online today!