how far can the irs go back
The IRS (Internal Revenue Service) has a statute of limitations for auditing and collecting taxes, which varies depending on the situation. Here are some general guidelines:
Audit Statute of Limitations:
- The IRS typically has 3 years from the date you filed your tax return to initiate an audit. This is known as the "3-year rule."
- If you omitted more than 25% of your gross income from your tax return, the IRS has 6 years to initiate an audit.
- If you filed a fraudulent tax return or failed to file a tax return, there is no statute of limitations, and the IRS can audit you at any time.
Collection Statute of Limitations:
- The IRS has 10 years from the date of assessment (when the tax was first due) to collect unpaid taxes. This is known as the "10-year rule."
- If you file for bankruptcy or make an offer in compromise, the 10-year clock may be temporarily suspended.
- If you agree to an installment agreement or make a payment on an old debt, the 10-year clock may restart.
Exceptions:
- If you owe taxes related to unreported foreign income or assets, the IRS has 6 years to initiate an audit and collect taxes.
- If you owe taxes related to employment taxes (e.g., payroll taxes), the IRS has 3 years to initiate an audit and 10 years to collect taxes.
What to do if you receive an audit notice:
- Respond promptly to the audit notice and provide the requested documentation.
- Consider hiring a tax professional or attorney to represent you during the audit process.
- Be prepared to explain any discrepancies or errors on your tax return.
What to do if you owe back taxes:
- File any missing tax returns and pay any owed taxes as soon as possible.
- Consider setting up an installment agreement or making an offer in compromise to settle your debt.
- Be aware that the IRS may charge penalties and interest on unpaid taxes.
Keep in mind that these are general guidelines, and the IRS may have more time to audit or collect taxes in certain situations. If you’re concerned about an audit or owe back taxes, it’s best to consult with a tax professional or attorney for personalized advice.
