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Apr 25, 2018

How many years of returns are at risk during an audit?

A crisp letter with an official seal appears in your mailbox and dread spreads across your face. It bears the logo of the Internal Revenue Service (IRS). Those letters are rarely good news. In fact, you may be like many other Americans this year who have received such a letter. That letter is letting you know that the IRS is putting you under audit.

Each year the IRS reviews as many of the tax returns as they possibly can from every American who submits them. They are mostly on the lookout for significant errors in reported income versus what a person actually made. Additionally, they tend to be more interested in higher incomes as the errors on those incomes would obviously be largely by nature. However, the IRS also does pull a random sample each year from the public at large to examine and figure out if there are any mistakes among those returns as well. Their goal here is to avoid allowing anything to slip through the cracks so to speak.

When you are the unfortunate one whom the IRS has selected for an audit, you have to start worrying about things such as how many years back the IRS is going to go in their audit. Perhaps you did not make any errors in your reporting this year, but what about in years prior? Just how far back are they allowed to go anyway?

The good news is that the IRS does make every legitimate effort to audit tax returns as quickly as possible. They want to eliminate this work off of their books just as much as you want them off of your back. Therefore, they do try to find the mistakes quickly. However, they can go back up to three years in most standard cases. If there are significant errors in reporting, they may drag this out as far back as six years into the past.

Both of those are a potentially long time for a taxpayer, but at least you know that they are not going all the way back through the entire history of your tax records just looking for something to nail you with. They really are just trying to find some of the most recent errors or omissions.

While it is nice to know that the IRS does not typically go back more than three years, it is also important that you keep all of your tax records in your possession in the event that they have questions for you about any particular year. It is a good thing to have something to reference when these questions start to come in from this government agency. You can spare yourself a lot of grief that way.

Take a look at the IRS website if you are fearful about how far back they are going to go. The truth is that the website is somewhat comforting in the fact that it reaffirms the notion that they will not often go back more than three years.

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Queens

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Astoria, NY 11106

Phone

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Brooklyn

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14th Floor,
Brooklyn, NY 11201

Phone

888-977-6335