Typical Audit Timeframes
The IRS typically has a three-year window to audit a tax return, starting from either the original due date or the date the return was filed, whichever is later. If an audit is not initiated within this period, the IRS generally cannot reassess the return or impose additional taxes.
Extended Audit Period for Substantial Underreporting
If more than 25% of your gross income is omitted from your tax return, the IRS has the authority to extend the audit period to six years. This extended timeframe allows the IRS to review cases where substantial amounts of income may have been left unreported, leading to potentially large tax underpayments.
Unlimited Audit Period for Fraud or Evasion
In situations involving fraud or intentional tax evasion, there is no statute of limitations for audits. The IRS can examine your tax returns indefinitely if they suspect fraudulent activity, including cases where false information was knowingly provided, or a return was not filed at all. This means the IRS can assess taxes and penalties for any year affected by fraudulent actions.
Unfiled Tax Returns
If you have never filed a tax return, the IRS is not restricted by any time limit. They can seek taxes owed for any year in which no return was submitted, regardless of how much time has passed.
These timeframes help both the IRS and taxpayers set clear expectations regarding audits and potential tax disputes. Keeping accurate records and following the filing guidelines reduces the risk of extended audits and additional liabilities.
