IRS Tax Audits: How Far Back Can IRS Go For a Tax Audit?

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A very common question we are asked is how far back will the IRS go on a tax audit?

Here are the remarks from the IRS Ta x Commi ssio ner about the audit lottery,compliance and how far back can the IRS go

“For most taxpayers the process ends there. But for the IRS, our compliance work now begins. Sophisticated risk models help IRS staff identify returns that are most likely to show compliance problems. Although I sometimes hear people refer to the IRS “audit lottery,” the process is far from random. The IRS uses the cumulative knowledge and

data over many years to model the risk of tax avoidance, and using these models we target our activities as precisely as we can. We then follow up with the taxpayer to better understand the issue, request documentation, and determine whether the return was accurate.

The “look-back,” which is the model of most major tax systems in the world, has some flaws. The biggest deficiency is that it does not deal with taxpayer problems up-front.

An IRS audit often occurs years after the return was filed.

For example, by law we have up to three years to audit an individual’s tax return; more time if there’s a 25 percent or more omission of income, or if fraud is involved.


Category: Taxes

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