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How Long Can the IRS Audit Your Tax Return?

How Long Can the IRS Audit Your Tax Return?

Many people are concerned about a possible IRS audit, as anyone can be audited, even without suspicions of misconduct. How long do you have to worry about a particular return being audited? It depends on the situation, and the following are some timelines for IRS audits. If you receive notice of an audit, you should immediately contact an experienced tax lawyer in San Francisco.

Three years – Generally speaking, the IRS has three years from the due date of your returns to begin an audit. However, there are many exceptions to the three-year rule.

Six years – If the IRS believes that your returns included at least a 25 percent understatement of income, it has six years to conduct the audit of those specific returns. For example, if you earned $150,000 in a year but only stated you earned $100,000, the six-year limitation would apply even if the understatement was unintentional. The six-year limit also applies for basis overstatements, such as overstating your investment in a property you sold.

The IRS has longer than three years in several situations involving foreign income or assets, including:

  • Omitting more than $5,000 of foreign income (even if you filed an FBAR regarding the account)
  • Failing to file Form 3520 regarding a foreign gift or inheritance
  • Failing to file Form 8938 regarding foreign assets and accounts
  • Failing to file Form 5471 about ownership in a foreign corporation

No time limit – If someone fails to file a return or files a fraudulent return, there is no limit to how long the IRS can take to audit.

Learn How Our Tax Lawyers in San Francisco Can Help

Audits are serious matters, and a San Francisco tax attorney can help avoid errors on your returns and represent you during an audit. Call Diosdi Ching & Liu, LLP at 415.318.3990 or contact us online to discuss our tax-related legal services today.