How Far Back Can the IRS Audit?

Written by Banks Editorial Team
3 min. read
Written by Banks Editorial Team
3 min. read

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You received an audit notice from the Internal Revenue Service (IRS) and went into full-blown panic mode. What exactly does this mean, and could you face severe financial consequences? What triggered the tax audit? What information will you need to provide to the IRS? What should you expect during the audit? How far back can the IRS go to audit past returns? 

These are all valid questions that we’ll answer in this guide. Furthermore, you can breathe easy knowing there are tax professionals that are available to help you navigate the audit process. 

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What is an Audit?

The IRS defines an audit as “a review/examination of an organization’s or individual’s accounts and financial information to ensure that information is reported correctly according to the tax laws and to verify the reported amount of tax is correct.”

What Happens in an IRS Audit?

IRS conducts audits by mail or in person. If the latter is necessary, it will be done in your home or office (if applicable), and you’ll work directly with an IRS agent. 

What You Need for an IRS Audit

The IRS will send you a written notice detailing the documents you’ll need to provide for the audit. These include receipts, bills, legal documents, loan agreements and canceled checks. Be sure to send copies and retain the originals. 

It’s equally important to stow away tax records from the filing data for at least three years as it’s required by law. 

What Are the Common Triggers of an IRS Audit?

The IRS uses two methods to select returns for audit: 

  • Computer screening and random selection: a statistical formula is used to compare your tax returns to other comparable returns 
  • Related examinations: your business or individual tax return is chosen because it includes transactions that involve other parties (including investors and business partners) who were also selected for an audit)

Here’s a closer look at common IRS audit triggers: 

Failure to Report All Taxable Income

The IRS has a reason to believe that you omitted a portion of your taxable income from the tax return filing. 

High Income

You’re considered a high-income earner. 

Large Charitable Deductions

The reported amount of charitable contributions is high compared to your earnings. 

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Excessive Deductions

You took a sizable amount of deductions. 

Earned Income Tax Credit

You claimed the earned income tax credit (EITC). 

How Far Back Can IRS Audit Returns?

IRS audits generally don’t go back more than three years. However, the statute of limitations is six years if needed. 

The Three-Year Audit

In most instances, the IRS will only review returns filed in the past three years. 

The Six-Year Audit

If the IRS uncovers what’s referred to as a “substantial” error, the audit may go back up to six years.

No Time Limit Audit

The statute of limitations does not apply to taxpayers who failed to file or sign tax returns or filed fraudulent returns. This is also the case if you receive foreign gifts, inheritances or income over $100,000 and fail to file Form 3520 (Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts). 

Get Professional Help for an IRS Audit

If you’re facing an audit and need professional assistance, look no further than the experts at Larson Tax Relief. It’s a team of licensed tax relief experts that can help you resolve your tax issues and defend your income and assets from the federal government. 

Also accredited by the Better Business Bureau (BBB) with an A+ rating, the firm employs Enrolled Agents and is available to help both individuals and businesses of all sizes in all 50 states navigate the complexities of IRS audits. Ultimately, Larson Tax Relief’s professionals want to ensure your rights are properly protected and you don’t pay the IRS any more than you legally owe. 

But audit assistance isn’t the only solution Larson offers. For over 15 years, the team has also helped both individuals and businesses resolve federal and state back taxes and past-due tax returns. Or, if you need emergency tax relief to shield your assets from levies and garnishment, Larson is also available to assist. 

If you owe more than $25,000, take the first step towards getting the relief you need and deserve by submitting an online inquiry. A seasoned tax expert will reach out to provide a free consultation and discuss possible remedies and a customized resolution plan to get federal or state taxing authorities off your back. To date, Larson Tax Relief has served well over 18,000 satisfied customers and is ready to provide you with the same level of exceptional service.

Larson Tax Relief

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