How Far Back Can the IRS Audit?
Generally the IRS has three years from the date you filed, or the due date if later, to audit and assess more tax. That becomes six years if you left out more than 25% of the gross income shown on the return, and there is no time limit for fraudulent returns or years you never filed. In practice the IRS usually audits recent returns.
The IRS cannot audit forever in most cases. The limit is set by the assessment statute of limitations.
The general rule: 3 years
The IRS generally must assess additional tax within three years after the return was filed (26 U.S.C. 6501(a)). A return filed early is treated as filed on the due date.
Exceptions
| Situation | Time limit |
|---|---|
| Omitted more than 25% of gross income stated on the return | 6 years (26 U.S.C. 6501(e)) |
| False or fraudulent return with intent to evade tax | No limit (26 U.S.C. 6501(c)(1)) |
| Willful attempt to evade tax | No limit |
| No return filed | No limit (26 U.S.C. 6501(c)(3)) |
| Certain unreported foreign assets or information returns | Extended in some cases |
| You agree to extend | As agreed |
Assessment vs. collection
Once tax is assessed, a separate 10-year period to collect begins. See how long the IRS can collect.
In practice
The IRS generally includes returns filed within the last three years in an audit, and if it finds substantial errors, it may look at additional years, usually not more than the last six (IRS).
Amended returns and refunds
To claim a refund, you generally must file within three years of filing the original return or two years of paying the tax, whichever is later.
How long to keep records
The IRS recommends keeping records for the period of limitations that applies, generally at least three years; six years if income might be underreported by more than 25%; seven years for bad debt or worthless securities deductions; and indefinitely if no return was filed or for fraud (IRS). Keep property records until the period ends for the year you sell the property.
State taxes
States have their own audit periods, sometimes longer than the federal rule.
If the IRS is looking at older years or suggesting fraud, talk to a tax lawyer. See also what to do if the IRS audits you.
Sources
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This article is general legal information, not legal advice, and reading it does not create an attorney-client relationship. Laws differ by state and change over time; talk to a licensed attorney in your state about your situation.