As tax professionals, it is understandable that taxpayers often express concerns about the possibility of undergoing an audit by the Internal Revenue Service (IRS). Audit selection can occur for various reasons, ranging from legitimate discrepancies in tax returns to random selection processes.
One common query among taxpayers pertains to the timeframe within which the IRS can conduct an audit of their tax return. Generally, the statute of limitations for audits extends to three years after the due date of the return or the date it was filed, whichever is later. However, should the IRS identify significant errors, they may request an extension of this limitation period.
It is crucial to recognize that the statute of limitations does not apply in cases involving fraud or failure to file a return. In such instances, the IRS retains the authority to audit the return indefinitely.
For taxpayers residing in California, it is pertinent to note that the statute of limitations (SOL) for tax assessments is subject to specific regulations. The Franchise Tax Board typically has four years from the date of the filed return to issue assessments for additional taxes, penalties, or fees. However, if the return was filed before the original due date, the four-year period commences from the original due date. Furthermore, if no return was filed for a particular tax year, the Franchise Tax Board reserves the right to issue assessments at any time.
We do offer IRS Advanced Notice Service;
Get a heads up 6 months in advance if your return was referred to the audit department.