The IRS cannot assess additional debt based on a tax return if three years have passed from the Tax Return's original filing date. See 26 USC Section 6501 – Limitations on assessment and collection
“Except as otherwise provided in this section, the amount of any tax imposed by this title shall be assessed within 3 years after the return was filed”
This means that the IRS cannot start an audit and than change the tax amount or “assess” the additional tax against you if 3 years have passed since you have filed your return. If you filed the return before April 15 in the year it was due, the three year time starts to run on the due date or April 15th.
Some exceptions exist to this rule…of course:
If you have understated your income by more than 25% this 3 year deadline can be extended to 6 years.
If you filed a fraudulent return, there isn't a time limit for the IRS to finish the assessment.
Really a repeat of the general rule stated differently…the audit time limit period only starts to run when you file your return. Un-filed tax returns are always subject to assessment by the IRS.
A partial exception exists in that the IRS Manual instructs the auditor to complete the adjusted assessment or close the audit within 28 months. It sets this internal deadline to provide itself time to deal with any appeal you may file to the assessment.
If you are being audited, look backwards to the date you filed the tax return and than count forward 3 years. The Auditor technically has that much time to make a decision and enter an assessment of the new amount the IRS thinks you should owe.
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