Statute of Limitations for the IRS Audit

Is there a statute of limitations to how far back in time the IRS can audit you? Internal Revenue Service audits usually go back three years in most instances, although there are certain exemptions.

In most audits, the IRS includes filings submitted in the last three years. However, if the IRS discovers a serious error during the inspection, it may conduct additional prior-year audits. In an audit, the IRS rarely goes back more than six years. Here’s everything you need to know about a statute of limitations for the audit and much more!

Is There a Statute of Limitations for the IRS Audit?

The statute of limitations, in this case, is six years. However, there are some tax disputes that do not have a statute of limitations. For example, there is no limitation of time for an audit if you miss filing Form 3520, which is related to overseas income, inherited wealth, or gifts worth more than $100,000.

There are a couple of other exclusions to be aware of. If you’ve never filed a tax return, there is no IRS audit statute of limitations. Also if you skip signing your tax return, the IRS may consider it unfiled. The same is true if you have previously filed a false tax return.

What Exactly Is an Audit and What Triggers It?

An IRS audit is a detailed examination and inspection of a person’s or company’s financial records. The Internal Revenue Service (IRS) strives to make sure that every taxpayer follows all tax regulations. One of the purposes of an audit is to ensure that no tax fraud is happening.

If you wonder what triggers the IRS audit, we got you. You can read it here – Audit – 5 IRS Triggers and What to Do if Audited?

How Long Does It Take To Go Through an Audit?

The majority of audits are completed within two years. The duration of the audit is determined by the type of audit, the severity of the issue, and if (and when) you submit all necessary information.

Of course, whether the taxpayer accepts or disputes the IRS conclusions has a significant impact on the audit’s outcome. If you truly disagree with the IRS’s decision, you should consult a tax attorney and another tax expert for assistance on the relevant tax regulations.

What if You Agree to the IRS Audit Conclusions?

If you agree with the conclusions, you must sign the audit report or an equivalent form, depending on what type of audit you got. The IRS offers many payment methods if you owe more taxes. The IRS will inform you of your options for payment.

And What if You Disagree?

You have choices if you disagree with the audit report. The first step is to set up a meeting with an IRS supervisor.

Appeal mediation, commonly known as Alternative Dispute Resolution, is an option (ADR). A qualified mediator works with the IRS agent appointed to your case and you to reach a resolution through ADR. If you want to resolve your conflict quickly, if there aren’t many topics for the dispute in question, or if you have evidence to back up your viewpoint, mediation is a good option. ADR is not the time to provide new information or extend the time limit.

You may seek an appeal if the statute of limitations has not expired. The IRS’s Independent Office of Appeals is intended to resolve disputes without resorting to litigation.

Perhaps the best thing to do here is to talk to a tax professional who can help you out with all this.

Is an Audit a Criminal Investigation?

An IRS audit isn’t the same thing as a criminal investigation.

When an IRS agent uncovers potential tax filing fraud, a criminal investigation may be launched. These suspicious cases are referred to IRS Criminal Investigation Division special agents to evaluate whether financial or tax fraud has occurred.

Whether or not the IRS initiates a criminal investigation is usually determined by the amount and scope of the suspected fraud.

How Can YPTA Help?

If you’re concerned you’ll get audited, the very first thing you should do is tidy up your books. Our team at YPTA specializes in assisting small and mid-size business owners who are behind on their bookkeeping. Our skilled bookkeepers collaborate with you to get your finances in order so you can deal with any tax issues more effectively.

YPTA’s tax experts can help you get your unpaid taxes submitted and determine your tax liability once your books are in order. Contact us today!