For many taxpayers, the fear of an IRS audit looms long after the filing deadline has passed. However, the IRS does not have an infinite amount of time to scrutinize every return. Knowing the “look-back” periods given by the Internal Revenue Code can offer clarity and ease some anxiety.
The standard three-year window
Under the US Code, the general statute of limitations for an IRS audit is three years. This period begins on the date you filed your return or the original due date, whichever comes later. For instance, if you filed your 2023 return on April 15, 2024, the IRS generally has until April 15, 2027, to start an audit.
The six-year extension
The IRS can extend the review period to six years if it finds a “substantial understatement of income.” This occurs when more than 25% of your gross income is omitted from your return, not limited to simple mistakes. This longer period also applies to certain foreign asset reporting issues.
No limit: special cases
In specific scenarios, the statute of limitations never expires. The IRS can audit you indefinitely if:
- You failed to file a tax return entirely
- You filed a false or fraudulent return with the intent to evade tax
- You willfully attempted to defeat or evade tax in any manner
Because the IRS can reach back several years, tax professionals recommend keeping all supporting records (receipts, 1099s, and bank statements, to name a few) for at least seven years.
Receiving an audit notice for a return filed over three years ago often suggests the IRS suspects a major issue. In these situations, understanding the complexities of the Internal Revenue Code may require assistance of an experienced attorney.