What is the IRS Audit Statute of Limitations?

The statute of limitations on how far back the IRS can audit (called the Assessment Statute Expiration Date or ASED) varies depending upon the circumstances of the tax return. In most cases the IRS will not go back more than 3 years unless there is something very wrong with the tax return that was filed. The statute of limitations starts on the original due date of the tax return. If the tax return was filed prior to the due date it doesn’t matter, the statute of limitations starts on April 15th of the year that the tax return was due. Below are the three different time frames the IRS can audit and descriptions of when each applies.

• 3 Year Period: This is the standard amount of time that the IRS has to legally audit most tax returns. This is the time period that applies if you do not fall into any of the two categories listed below.
• 6 Year Period: If the income on the tax return was understated income by 25% or more the statute of limitations to audit the return can be extended by another 3 years.
• Unlimited Time Period: If the tax return was filed with the intent to commit fraud then the statute of limitations can be extended to forever. There is a fine line between fraud and negligence and this only applies to tax fraud. The IRS must prove fraud in these types of cases and typically will only do this if a lot of money is involved or it is a high-profile tax case.

The statute of limitations on unfiled returns is effectively six years, but it can actually be unlimited in some cases. As indicated above, the rules can vary depending on the situation. Once the taxes have been assessed, the collection statute of limitations comes into play. The IRS has 10 years to collect assessed tax debt.

When You Will Likely Receive an IRS Notice

Since tax audits take time and the IRS does realize that they are slow, they try to get audits out as soon as possible. The IRS sends a variety of notices to alert taxpayers of a potential audit, these are the details on a few of the audit notices. As soon as possible for the IRS is typically around 12 months to 18 months after the tax return is filed, sometimes sooner. The IRS likes to give themselves 1-2 years to complete the audit because they realize that they can run into many delays along the way. They try to factor in a lengthy audit process and a 6-8 month appeal process. If the IRS does not complete the audit within 3 years of the due date for the tax return then the taxpayer cannot be held liable for any additional taxes owed (unless fraud exists or income was under reported by 25% or more).

Typically if you do not receive an audit notice within one and a half years after you filed your return it is unlikely that you will get audited. It is not in the best interest of the IRS to go after people more than 18 months prior to the return being filed because they run the risks of having a lot of audits go past the statute of limitations and their audit efforts would not pay off as much.

If you are looking for help with a tax audit, review this list of tax professionals who have experience resolving IRS audits or start a search below and click "audit or examination" using the filters on the search page under "problem experience."