Statute of Limitation for Tax Audits

One of the things that create a considerable amount of stress on people who owe back taxes with the IRS is how far can they audit you.  Because once you owe the IRS money, you start to stress and assume that they can do all kinds of things to you as well as audit prior returns to go after you for more money.  Well, generally, there is a three day statute of limitation.  That means that they have three years to audit your tax returns after you file them.

This is set forth in the Internal Revenue Code Section 6501(a) and 301.6501(a)-1(a) of the Income Tax Regulations.  However there is an exception.  The exception works as follows.  If after you get audited by the IRS and in the audit they find that you omitted in excess of 25% of your gross income in your tax return then they go back as far as six years to audit you.  See IRC 6501(e) and Income Tax Regulation 301.6501(e)-1.

The three year statute of limitation also does not apply at all if you filed a false tax returned or a fraudulent tax return with the intent to evade taxes pursuant to IRC 6501(c)(1) and Income Tax Regulation Section 301.6501(c)-1.