Forbes has published an article, “IRS Audits: 3 Years, 6 Years Or Forever, Which Applies To You?”, which discusses the statute of limitations on IRS audits. The article begins as follows:
Wouldn’t it be satisfying to say this to the IRS? “Sorry, IRS, you missed your deadline, it’s too late to audit me!” The IRS usually has three years after you file to audit you. But there are many exceptions that give the IRS six years or longer. No one wants to be audited by the IRS. Even if you think your taxes are pristine, gathering receipts is no fun, nor is explaining what you did and why. If your returns have unusual or aggressive items, it can be chilling. It pays to know how far back you can be audited. Figuring out the statute of limitations that applies to your situation—and then waiting it out—can be nerve-wracking. An audit can involve targeted questions and requests of proof of particular items, or can cover the waterfront, asking for proof of virtually every line item. Frequently, the IRS says it needs more time to audit. The IRS will ask you to sign a form extending the statute of limitations, usually for a year. If you don’t sign, the IRS will send you a tax bill, usually based on unfavorable assumptions. Most tax advisers generally tell clients to agree to the extension. However, it’s best to get some professional advice about your own situation. You may be able to limit the time or scope of the extension.
Click here to see the full article: “IRS Audits: 3 Years, 6 Years Or Forever, Which Applies To You?”
Posted by Anthony Tran, Associate Editor, Wealth Strategies Journal