How Far Back Can The IRS Audit?


In this world, nothing can be said to be certain, except death and taxes – Benjamin Franklin

The thought of being audited by the IRS after you’ve filed your tax return is enough to keep most of us awake at night and ensure that our dreams become panic-fueled sweat-filled nightmares.

Even the old adage about having nothing to fear if you’ve done nothing wrong isn’t enough to assuage the fear of an audit, as everyone knows someone who has fallen at one of the many hurdles that the IRS has placed in their path, and the simplest, most innocent and unintentional mistake on a tax form can land you in an interview room in the IRS offices.

At least, that’s the way it seems, as the urban myths and suburban legends concerning the Internal Revenue Service have grown in stature, and been magnified a hundredfold as they’ve been passed from generation to generation and from person to person.

The truth about audits is actually far more mundane and a lot more straightforward than the old wives’ tales about their veracity would have you believe, and most people who are audited by the IRS are done so at random and have absolutely nothing to fear from the process.

And we’re going to further allay any concerns you might have about being audited by explaining the time factors involved in the procedure.

How Far Back Can The IRS Audit

How Long Does The IRS Have To Audit You?

The usual period that the IRS has to audit you from the time you file a tax return if they have reason to believe that you have overstated something (usually property taxes) on your return or made an error on your form is three years.

This was ratified by the Supreme Court and became law until it was appealed by Congress who increased the period during which the IRS could audit to six years if the return in question was subject to overstatement or failed to mention taxes that should have been paid on foreign earnings or investments.

Six years sounds like a long time, especially when the power to use that period of time was given to the IRS by the Federal Government, but it doesn’t completely govern the length of time that the IRS has to issue and conduct an audit.

If someone has failed to file a tax return, and the IRS has no record of the individual in question ever having filed a tax return, then there is no statute of limitations governing or controlling how long the IRS has to audit, which means that there is no time limit on how long the IRS has to audit that person.

The same statute of limitations applies if the IRS has never received certain tax forms from an individual, which theoretically gives them the power to audit someone forever if they’ve been negligent with their returns.

Knowing that has probably made your fear of an audit even worse than it was when you first started reading this article, but don’t worry and don’t panic as the only time that the IRS usually invokes those clauses is when they’re chasing high rollers and the people who seemingly dedicate an unhealthy amount of their lives to actively avoid paying any taxes.

For most of us, if the IRS doesn’t audit within a tax year, they’re unlikely to do so and won’t go past the three-year mark for average citizens who always file their taxes correctly and on time.

How Long Does The IRS Have To Audit You

What About The Ten-Year Rule?

The ten-year rule governs the amount of time that tax debt can exist without being actively pursued.

In most cases,if an individual owes the IRS or the federal government any amount of taxes, and the IRS has failed to actively engage with the person in question to claim the amount, or goods to the value of that amount owed, after ten years the debt will be written off, forgiven and wiped clean.

However, the rule is subject to a lot of ifs and buts and maybes and depends entirely on whether there were any suspensions or court judgments involved, the date on which the taxes were filed, and the date on which the IRS became involved and actively began to chase the case and the debt.

It is, as most things involving taxes are, entirely dependent on the vagaries of the law and the fine print that controls the legal system.

How Can I Avoid Being Audited?

Unless you’re a tax lawyer or an accountant and have an intimate and innate understanding of the way in which tax law works, there’s only one guaranteed way to avoid being audited even if you file all of your paperwork correctly and on time and that’s hire an accountant and have them file your taxes for you.

If a professional files your taxes for you, based on the correct information, you’ll never have to think about an audit again.

But if for any reason the IRS does contact you, before you speak to them, make sure you get the right professional advice before you agree to an interview, and remember that as long as you haven’t violated any laws and have nothing to hide, you have absolutely nothing to fear or worry about.

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