Forbes has published an article, “IRS Can Audit Your Taxes Forever If You Miss A Key Form”, which discusses the statute of limitations on IRS audits, with specific attention to ramifications for failing to properly submit certain forms. The article begins as follows:
It can be pretty satisfying to tell the IRS they are too late to audit you. But when might you be able to say that? Your exposure is at least three years after when you file your return, but many people are surprised that you might be a risk for years more. The time periods can be downright frightening in some cases. Tax lawyers and accountants are used to monitoring the duration of their clients’ audit exposure, and so should you. Watch the calendar until you are clear of audit. In most cases, that will be either three years or six years. But in some cases, even though you filed and thought everything was in order, the statute of limitations never runs. Let’s start with the basic three year rule, but in many cases, IRS can audit 6 tax years not 3. So if you are thinking you only need to look over your shoulder for three years, that isn’t always so. For example, the usual three years is doubled to six if you omitted more than 25% of your income. If you overstate your cost basis on something you sell, that counts too. So if it has the effect of understating your income by more than 25%, the IRS gets six years. The three years is also doubled if you omitted more than $5,000 of foreign income (say, interest on an overseas account), even if you disclosed the account!
Click here to see the full article: “IRS Can Audit Your Taxes Forever If You Miss A Key Form”
Posted by Anthony Tran, Associate Editor, Wealth Strategies Journal
Wealth Strategies Journal 