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How Far Back Can I Be Audited?

  • 10 November 2015
  • Author: Cari Holbrook
  • Number of views: 2446
How Far Back Can I Be Audited?

Many myths circulate around IRS audits. One, for instance, is that an audit is some big, scary situation in which a taxman in sunglasses and a suit arrives at the door, briefcase in hand, ready to dig through shoe boxes of receipts on the spot. The reality, however, is much less dramatic. The IRS conducted the majority of its 2014 audits, 71 percent, by correspondence (meaning a letter). Only the remaining 29 percent were conducted in person. If an in-person audit is determined, the IRS will send you a letter notifying of the audit and requesting a mutually agreeable date and time. The letter will usually specify the items under examination and contain a list of documents/bank statements, etc., that you should bring.


Another set of myths surrounding audits has to do with the length of time the IRS is allowed to dig into your financial past. The truth is that the IRS prefers to take care of business as quickly as possible, and most audits take place within two years. But, as we all know, that sometimes doesn’t work out. The IRS can generally audit returns filed within the last three years. If a substantial error is identified, the IRS will not usually go back more than the last six years. If, however, no return has been filed (not only income tax, but also payroll, gift or other tax returns), then there are no time constraints placed upon the IRS.


The IRS may ask you to extend its statute of limitations if an audit isn’t resolved in time. Of course, it’s best to work with a tax advisor to determine whether or not granting an extension is in your best interest.


The following chart generally summarizes when certain IRS audits can happen. As always, feel free to contact us for additional questions.



Main Image Copyright: zestmarina / 123RF Stock Photo


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