Frequently Asked Questions
How long does the IRS have to audit a filed tax return?
Answer: Forever. However, to make an assessment (i.e. a determination that additional tax is due) the IRS generally has three (3) years.
Does the IRS ever have more than three years to make an assessment?
Answer: Yes. If a taxpayer underreports gross income by 25%, the IRS has six (6) years to make an assessment. If the taxpayer's return is fraudulent, the IRS has forever (i.e. there is no statute of limitations). Additionally, when a taxpayer fails to file a return, there is no statute of limitations on assessment.
After an assessment, how long does the IRS have to collect a tax?
Answer: Generally, ten years, unless the taxpayer agrees to an extension of the collection period or the IRS begins an action in Federal District Court to convert the assessment to a judgment. There are also a number of events that can toll the statute.
Tips:
If you are entitled to a refund for any year, timely file the return for that year and make the refund claim. In particular, money paid throughout a tax year through wage withholding is deemed paid on April 15 of the following year. So if a taxpayer is a W-2 wage earner in 1996, all of the withholding will be deemed paid on April 15 of 1997. A taxpayer can claim a refund of tax paid within the later of two years from the date the tax was paid, or three years from the filing of the return. If no return is filed within three years, the money is lost and the taxpayer will not be entitled to a refund.
Generally, when dealing with the IRS on a civil tax matter (this suggestion is not intended to be applicable in potentially criminal tax matters), respond timely to all notices and try to work with the Service to resolve any problems. Generally, the IRS will only resort to forced collection efforts when it is repeatedly ignored by a taxpayer. Further, there are time sensitive notices that are sent by the Service to a taxpayer, and failure of the taxpayer to respond timely forfeits certain of the taxpayer's rights.
Remember, a joint return means joint and several liability, not just for the amount shown to be due on the return, but also for any amount later determined to be due. Additionally, each spouse is charged with the duty to review a return and signs to its validity under penalty of perjury. While a provision of the Code exists to relieve some spouses of liability where an understatement of tax was "grossly erroneous", the standard to obtain this relief is complicated and the burden is on the spouse claiming the relief to prove each element by a preponderance of the evidence. Thus, before signing a joint return, review the return for accuracy and ask questions concerning any problems or inconsistencies on the return.
