What is the IRS Statute of Limitations?

The IRS Audit Statute of Limitations refers to the time period during which the Internal Revenue Service (IRS) can audit a taxpayer's tax return.

The IRS is typically allowed three years to audit a tax return, starting from the date of filing or the due date of the return, whichever is later. In some states like California, this period is extended to four years. If a return is filed after the due date, the statute of limitations does not begin until the date of filing.

However, if a tax return includes a substantial understatement of income, which is defined as omitting more than 25% of taxable income, the statute of limitations is doubled to six years. In this case, the IRS has six years to conduct an audit.

If a taxpayer fails to file a return or is deemed a fraudulent return, there is no statute of limitations, and therefore, there is no time limit for the IRS to audit a tax return.