Have you ever wondered how long you should keep tax return documents, just in case the IRS decides to audit it? Even if you do your best with your taxes, taxes are horribly complex. Here are a few tips form IRS Audit Group, Newport Beach about laws that set time limits on IRS audits.
Under the Internal Revenue Code, Section 6501 provides the statute of limitations on audit IRS. It varies depending upon the circumstances of the tax return. Generally, IRS will not go back more than 3 years unless there is something very wrong with the tax return that was filed.
The statute of limitations starts on the original due date of the tax return. If the tax return was filed prior to the due date it doesn’t matter, the statute of limitations starts on April 15th of the year that the tax return was due. The professional at IRS Audit Group, Newport Beach advises that filing a tax return on extension has the downside of extending the time your return is subject to an audit. So, if you filed your 2013 tax return on April 15, 2014then the IRS would have time until April 15, 2017, to audit it. However, if you had requested an automatic extension and filed tax return on Oct. 15, 2014 then the IRS still has time until Oct. 15, 2017, to audit your return and assess any additional tax and penalties due.
Below are the three different time frames and descriptions of when each applies for the IRS to audit your tax return according to the analysis done by the professionals at IRS Audit Group, Newport Beach.
3 Year Period: This is the standard amount of time that the IRS has to legally audit most tax returns. This is the time period that applies if you do not fall into any of the two categories listed below.
6 Year Period: If the income on the tax return was understated income by 25% or more the statute of limitations to audit the return can be extended by another 3 years. It is really worth noting that the IRS doesn’t consider any amount as omitted from gross income if you disclose it in the tax return, or in a statement attached to it, and you do it in a manner that’s adequate for the IRS to appraise the nature and amount of the item. So, in case you used an estimated cost basis to reduce the capital gains income on the sale of property. However, you disclosed this and the possible lower cost basis on a written statement, the IRS would have only three years to audit that tax return.
Unlimited Time Period: If the tax return was filed with the purpose to commit fraud then the statute of limitations may be prolonged to all the time. There may be a great line between fraud and negligence and this best applies to tax fraud. The IRS ought to show fraud in those forms of cases and generally will most effective do that if a variety of money is concerned or it is an excessive profile tax case.
IRS Audit Group, Newport Beach attorneys are extremely passionate about helping people, and at IAG we are dedicated to resolving your IRS tax issues. The tax attorneys at IRS Audit Group, Newport Beach take pride in being accessible, efficient, and responsive.
How long does IRS Audit Process Take?
An audit may seem like it takes an eternity. For some people, an audit will take longer than for others. The IRS cannot say how long an audit will take; however, they like the audited would like to get the procedure completed as soon as possible. Numerous items can prolong an audit.
Delaying by not providing
One such item would be a delay in getting the IRS their requested documentation. Not providing the IRS with the documents in time can lead to further issues with the IRS. It is not recommended to delay in handing over the documentation to buy some time. Just and over the documentation.
Other reasons for a delay
An audit can likely lead to disagreements. And sometimes you may not be able to meet on time because of conflicting schedules. These conflicts are to be expected, and the IRS does attempt to work with the auditees to try and make sure that it runs smoothly.
Causing a delay is not a wise idea. This can upset the auditor or the IRS agent, and one of the most important things to remember during an audit is that the IRS is the most brutal collection agency in the world. They can freeze your accounts; they can garnish your paychecks; they can take your home. With all of the power that they wield, it is vital not purposely to delay, but it might be possible to get an extension of time.
Disagreements are normal, and it is likely that the auditee and the auditor may not agree on certain aspects of a return or findings.
How to handle a disagreement
If you do not agree with the findings in an audit, one can request mediation and to speak with an IRS manager. It is even possible to appeal the findings. This may only be possible if it is still within the statute of limitations. This is because it can depend on how far back the IRS can audit you.
It can get worse
Disagreements in how to handle a certain deduction or how to handle incoming funds can delay things further. It is possible that these disagreements would require the auditee and the IRS to go to tax court. The IRS does follow existing laws and existing precedents. It may not be wise to go to tax court, and one should strive for mediation. No matter what happens during the audit, it is important that the auditee remembers that they are a taxpayer, and as a taxpayer they have rights.
An audit can go back three years but in some cases six-years. If there was an active attempt to defraud the government, there is no statute of limitations. In either case, the taxpayer does not have to face it alone.