How Far Back Can the IRS Audit You?

May 21, 2021

Are you wondering how far back the IRS can audit you? In most cases, the IRS has 3 years to initiate an audit. However, there are certain cases where the IRS can go back 6 years or even further to audit you.

The statute of limitation begins:

  • When the tax return was due: April 15 is the normal tax deadline every year, but there can be exceptions in cases like natural disasters (or global pandemics).
  • When the tax return was filed: If you file your tax return after the federal due date, the date the tax return was actually filed marks the beginning of the audit clock.

We recommend keeping tax records for at least 3 years, if not longer.

An IRS Audit Can Sometimes Go Back 6 Years

An audit can go back 6 years if the audit uncovers “substantial” underreporting of income.

Once the IRS initiates an audit and starts examining your records, the auditor may find taxable income that wasn’t reported on your tax return. If you underreported your income substantially (typically by 25% or more) then the IRS can expand the audit to go back 6 years.

The more sources of income you have, the more likely you are to make a mistake on your tax return. Some common examples of income that may be unreported or underreported are:

  • Wages from a job
  • Dividends from a corporation
  • Money earned from cryptocurrency investments
  • Capital gains from stocks or real estate
  • Income from a rental property
  • Funds in offshore accounts

Additionally, when you’re undergoing an audit, the IRS may ask you to voluntarily extend the statute of limitations on certain tax years. There can be times where this works out in your favor, but it’s crucial to speak to a tax lawyer about your specific situation.

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An IRS Audit Can Sometimes Go Back Indefinitely

There is no limit to how far back an audit can go if a tax return was never filed, or if the IRS suspects tax fraud.

If You Never Filed a Tax Return:

As we mentioned earlier, the audit clock begins when the tax return was due or when it was filed, whichever is later. If you never file your tax return, the statute of limitations for that tax year never begins, and the IRS can audit you at any time.

If the IRS Suspects Tax Fraud:

If you’re undergoing an audit and the examiner finds reason to suspect fraud, there is no limit to how far back an audit can go. They can go back any number of years to assess additional tax and penalties.

There’s a difference between underreporting income and committing tax fraud. Tax fraud involves intentionally trying to cheat the IRS; it’s a very serious offense that can lead to hefty fines and even prison.

Need Help With an IRS Audit?

Is the IRS breathing down your neck? Have federal or state authorities targeted you for an audit? No problem; we’re here to make it better.

Our team of experienced tax audit defense team has carried countless individuals and businesses through the audit process. We lift the burden from your shoulders and secure the best possible outcome for you. Contact us online or call (847) 580-1279!


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