{"id":1909,"date":"2020-11-02T22:22:28","date_gmt":"2020-11-02T22:22:28","guid":{"rendered":"https:\/\/www.irstaxapp.com\/?p=1909"},"modified":"2020-11-03T17:00:53","modified_gmt":"2020-11-03T17:00:53","slug":"how-far-back-can-irs-audit","status":"publish","type":"post","link":"https:\/\/www.irstaxapp.com\/how-far-back-can-irs-audit\/","title":{"rendered":"How Far Back Can IRS Audit?"},"content":{"rendered":"\n
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One of the most common queries of taxpayers is: How long before I can be sure I am safe from the IRS ? Basically, he is asking ” How long before he can consider himself safe from the IRS\u201d? The answer to such a question can not ever be absolute<\/em>, because the way Internal Revenue Code ,other Rules and procedure are laid down , one can only set general assumption about the time limit after which a person can feel safe from IRS audit. For a general assumption, one needs to study the statute of limitations on assessment and the exceptions to the general rule <\/p>\n\n\n\n

What are the limitations to assess, impose Tax & penalty ?<\/h2>\n\n\n\n

As per IRC Section 6501<\/a>, the IRS must assess additional tax and propose penalties no later than 3 years after either a tax return is filed or the return\u2019s due date, whichever is later.If the IRS fails to assess additional tax and penalties within this 3-year period, it is timed barred from doing so. For ready reference  , the section 6501(a) of US Code 26 given below :<\/p>\n\n\n\n

(a)<\/span>General rule<\/span><\/p>\n\n\n\n

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Except as otherwise provided in this section, the amount of any tax imposed by this title shall be assessed within 3 years after the return was filed<\/strong> (whether or not such return was filed on or after the date prescribed) or, if the tax is payable by stamp, at any time after such tax became due and before the expiration of 3 years after the date on which any part of such tax was paid, and no proceeding in court without assessment for the collection of such tax shall be begun after the expiration of such period.<\/strong> For purposes of this chapter, the term \u201creturn\u201d means the return required to be filed by the taxpayer (and does not include a return of any person from whom the taxpayer has received an item of income, gain, loss, deduction, or credit).<\/em><\/p><\/blockquote>\n<\/div>\n\n\n\n

So , generally , you can think you are safe after three years from date of filing of tax return. In other words, generally , IRS audit can happen till three years from date of filing your taxes. But , I said generally ! <\/p>\n\n\n\n

Are there any exception to 3 years time Limit ?<\/h2>\n\n\n\n

Yes, following are the exceptions to three years time limit. <\/p>\n\n\n\n

  1. Bankruptcy by taxpayer,<\/li>
  2. Issuance of a Notice of Deficiency by the IRS, and<\/li>
  3. Taxpayer involvement in a third party summons enforcement action.<\/li>
  4. You agreed for Extension of Limitation date<\/li>
  5. Reassessment of Income<\/li>
  6. Original return  filed fraudulently<\/li>
  7. No return was filed<\/li><\/ol>\n\n\n\n

    (i) Bankruptcy by taxpayer<\/h3>\n\n\n\n

    If a taxpayer files for bankruptcy protection, the IRS cannot assess a tax debt during the automatic stay period. As a result, the statute of limitations is suspended for the period of the automatic stay plus 60 days.<\/em><\/p>\n\n\n\n

    Where the IRS assess additional tax after bankruptcy, the taxpayer should confirm that the assessment was not made during a period for which the IRS was stayed from doing so. Failure by the IRS to properly and timely assess a tax debt after bankruptcy can invalidate the assessment.<\/p>\n\n\n\n

    (ii) Notice of Deficiency by the IRS<\/h3>\n\n\n\n

    When the IRS issues a Notice of Deficiency<\/em><\/strong> to the taxpayer, the time limit is extended\u00a0 until either<\/p>\n\n\n\n