Broker Check

IRS Audits

May 06, 2024

Generally, the IRS can include tax returns filed within the last three years in an audit.  In some instances, such as grossly understating income or fraud, the IRS can go back even further to six years or an unlimited number of years, depending on the circumstances.

The three-year period is an important period to monitor because it is the time that the IRS can review/audit your return but also the same time that you have, as a taxpayer, to amend your return to correct any errors on the originally filed return to claim any potential refunds. This three-year period starts with the date the return is filed.

In the event you catch any errors on your income tax returns that could result in a balance due (increased tax liability), it is important to review your options which may include filing an amended return to correct the error or waiting for the IRS’s computer systems to catch the error and send you a notice with the proposed changes and balance due.  With the latter, there is always the risk that if it occurs later, but still within the three-year period, there may be interest and penalties due. Any interest and penalties can start accruing after the year’s tax filing deadline. Whereas self-reported errors are generally charged interest but not penalties.