How Long Does The IRS Have To Audit Income Tax Returns Or Collect Back Income Taxes?

Many people wonder just exactly how long the IRS has to begin an audit of an income tax return or to collect unpaid income taxes. The answers to these questions generally depend on whether a return was ever filed and what was disclosed on the return.

Sections 6501 and 6502 of the Internal Revenue Code and the accompanying regulations provide the starting point for determining the time limit the IRS has to begin an audit or attempt to collect unpaid taxes. The general rule is that the IRS has 3 years from the date the return is filed to begin the audit or collection process. This 3 year rule can be extended to 6 years if the taxpayer fails to report an items of gross income that is in excess of 25 percent of the amount of gross income actually shown on the return or is attributable to certain foreign financial assets valued at greater than $5000. If the taxpayer fails to file a return or files a return that is false or fraudulent then an audit or collection procedure may being at any time.

Once the IRS has assessed and imposed a tax upon the taxpayer, it generally has 10 years from the date of the assessment to collect the tax, impose a levy, or initiate court proceedings. This 10 year statute of limitations can be extended by agreement, in writing, between the IRS and the taxpayer, provided that the agreement is reached prior to the expiration of the 10 year term. The IRS has a statutory duty to notify the taxpayer of their right to refuse an extension of the 10 year period if they so desire.

The above described rules are merely a basic introductory guide and are not intended to serve as a comprehensive analysis of all time restrictions imposed upon the IRS in the collection of taxes. If you have a question about your taxes, it is best to consult with an Attorney in Jacksonville who can assist you in understanding your rights and responsibilities under the law.