Frequently Asked Questions About IRS Statutes of Limitations

The statute of limitations establishes the period during which the IRS may assess additional tax, collect an assessed tax liability, or a taxpayer may claim a refund. Different statutes apply depending on the type of tax matter, and numerous exceptions can extend or suspend these deadlines.

No. The Internal Revenue Code contains multiple statutes of limitations, including those governing:

– Assessment of tax
– Collection of tax
– Criminal tax prosecutions
– Refund claims
– Partnership examinations
– Estate and gift taxes
– Employment taxes
– International information returns

Each has its own rules and exceptions.

Generally, the IRS has three years from the date a return is filed to assess additional tax. However, several important exceptions may extend this period.

Generally, the limitations period begins on the later of:

– the date the return is filed, or
– the original due date of the return (including returns filed early, which are generally treated as filed on the due date).

Yes. Several exceptions permit the IRS to assess tax after the normal three-year period.

The IRS generally has six years to assess additional tax if a taxpayer omits more than 25% of the gross income reported on the return. Similar extended rules may apply in certain situations involving foreign income and offshore assets.

Yes. In certain situations, there is no time limit for assessment, including when:

– No tax return is filed;
– The IRS alleges a fraudulent return was filed with intent to evade tax; or
– Certain required international information returns are not filed, potentially affecting the statute under specific provisions of the Internal Revenue Code.

Generally, no. Filing an amended return usually does not restart the assessment statute. However, amended returns can create additional issues depending on the nature of the changes and the timing.

If the IRS establishes civil tax fraud, there is generally no statute of limitations on assessment for that return. Fraud allegations are highly fact-specific and often involve significant legal and evidentiary issues.

Generally, no. If a required return is never filed, the IRS may assess tax at any time because the statute of limitations generally does not begin to run until a valid return is filed.

In most cases, the IRS has 10 years from the date the tax is assessed to collect the liability. This period is commonly referred to as the Collection Statute Expiration Date (CSED).

Yes. Certain events may suspend or extend the collection period, including:

– Bankruptcy proceedings
– Collection due process hearings
– Pending offers in compromise
– Certain installment agreement requests
– Living outside the United States for extended periods
– Other statutory suspension events

Generally, once the collection statute expires, the IRS may no longer pursue administrative collection of the liability, absent unusual circumstances.

Generally, a refund claim must be filed within:

– Three years after the original return was filed, or
– Two years after the tax was paid,

whichever period expires later.

If the statute expires before a valid refund claim is filed, the refund is generally barred by law.

Yes. Most federal criminal tax offenses have statutes of limitations, although the applicable period depends on the specific criminal charge involved.

No. Criminal tax prosecutions are subject to statutes of limitations established by federal law. However, determining when the limitations period begins and whether it has been tolled can involve complex legal analysis.

FBAR reporting is governed by the Bank Secrecy Act rather than the Internal Revenue Code. Separate statutes of limitations apply to FBAR penalties and enforcement.

Potentially. Certain failures to file required international information returns may extend the IRS assessment period under specific provisions of the Internal Revenue Code.

Yes. During an audit, the IRS may request that a taxpayer sign a consent extending the assessment statute.

There is no universal answer. Extending the statute may provide additional time to resolve complex issues administratively, but it may also allow the IRS additional time to develop its case. The decision should be made only after evaluating the specific circumstances of the examination.

The IRS maintains records regarding applicable limitation periods, but disputes occasionally arise regarding when a statute began, whether it was suspended, or whether an exception applies.

Sometimes. If the IRS attempts to assess or collect tax after the applicable statute of limitations has expired, the taxpayer may have a complete legal defense.

The Internal Revenue Code contains numerous exceptions, tolling provisions, and specialized rules that apply to different types of taxes, penalties, and reporting obligations. Determining the applicable statute often requires careful analysis of the facts and procedural history.

Yes. One of the first issues we analyze in any tax controversy is whether the government is still legally permitted to assess or collect tax. Determining the applicable statute of limitations often requires a careful review of tax returns, IRS transcripts, assessment dates, prior agreements with the IRS, and events that may have suspended or extended the statutory period.