How far back can the IRS audit your tax returns?

Usually three years. Under the Internal Revenue Code, the IRS has three years after a return is filed to assess more tax, and a return filed before its due date is treated as filed on the due date. That window grows to six years when a large amount of income was left off the return, and it never closes for a fraudulent return or a year with no return at all.

The IRS itself says an audit generally covers returns filed within the last three years, that it may add years if it finds a substantial error, and that it usually does not go back more than six. Most audits involve returns filed in the last two years. The rest of this page explains where those limits come from, what stretches them, and why the date matters so much once an IRS audit or examination is under way.

How the IRS works out whether a year is still open

Every tax year has its own deadline, and the IRS tracks it year by year. The order of the questions is the same in almost every case:

1. Find the filing date. A return filed early counts as filed on its due date; a return filed late counts from the day the IRS received it. Three years from that date is the starting answer.
2. Check the six-year rules. A large omission of income, or more than $5,000 of omitted income tied to foreign financial assets, doubles the period.
3. Check the no-limit cases. A fraudulent return, or no return at all, leaves the year open indefinitely.
4. Add any time you agreed to. A signed consent extends the deadline to the date or period it states.
5. Add any suspension. A notice of deficiency, and in some cases a bankruptcy filing, stops the clock for a while.

The IRS calls the resulting date the assessment statute expiration date, or ASED. Once it passes, the IRS cannot assess more tax for that year.

What does the three-year rule actually cover?

Section 6501(a) of the Code says tax must be assessed within three years after the return was filed. Assessment is the formal step of recording the tax on your account; once the period runs out, the IRS can no longer assess additional tax for that year, even if it was discussing an adjustment with you before the deadline passed.

Two details trip people up. First, filing early does not start the clock early: a return filed before its due date counts as filed on the due date. Second, filing late starts the clock late. The IRS gives this example: a 2021 return filed on its April 18, 2022 due date had an assessment deadline of April 18, 2025, while the same return filed late on October 31, 2022 had a deadline of October 31, 2025.

When does the IRS get six years?

Section 6501(e) doubles the period to six years in two situations involving income tax:

• You left off income that is more than 25 percent of the gross income stated on the return.
• You left off more than $5,000 of income tied to specified foreign financial assets (the assets reported on Form 8938), even if that amount is well under 25 percent.

For a business, "gross income" for this test means total receipts from sales of goods or services before subtracting the cost of those sales, which makes the 25 percent threshold harder to cross than it first appears.

When is there no time limit at all?

The statute lists situations where the IRS can assess tax at any time. The two that matter most for individuals and small businesses are a false or fraudulent return filed with intent to evade tax, and a year for which no return was filed. If the IRS prepares a substitute return for you, that does not start the three years; filing your own return does.

A missing international information return can also hold a year open. When a required form such as Form 8938 or certain foreign trust and foreign corporation reports was not filed, the assessment period for that year does not expire until three years after the IRS receives the information. If the failure was due to reasonable cause, the extension applies only to the items related to the missing form.

Because fraud removes the time limit and carries its own penalty, an examiner who sees signs of intent changes the stakes of an old-year audit. Our page on the warning signs that a civil audit could turn criminal covers what examiners are trained to look for.

The time limits at a glance

Can the IRS ask you to extend the deadline?

Yes. When an audit is still open as the deadline approaches, the examiner may ask you to sign a consent extending it. The law requires the IRS to tell you, each time it asks, that you can refuse, or that you can limit the extension to particular issues or a particular period. IRS Publication 1035 describes two forms: a fixed-date consent (Form 872) and an open-ended consent (Form 872-A), which generally stays open until 90 days after either side sends notice ending it. A restricted consent keeps the year open only for the items it names.

Publication 1035 frames the choice as three options: sign an unconditional consent, negotiate its length or the issues it covers, or refuse. It also says that no penalty is ever charged for declining to sign. Refusing is a real option, but it has consequences. The IRS says that if you decline, the examiner will make a determination based on the information already provided, usually by issuing a formal notice. And an administrative appeal generally needs at least 365 days left on the assessment date when the case reaches the IRS Independent Office of Appeals, so a refusal can cost you that step. Whether to sign, and on what terms, is one of the more consequential choices in an audit.

Does anything else stop the clock?

A notice of deficiency, often called a 90-day letter, suspends the assessment period. It gives you 90 days (150 days if the notice is addressed to someone outside the United States) to petition the U.S. Tax Court, and the IRS explains that the suspension starts the day after the notice is mailed and ends 60 days after a final Tax Court decision. The IRS also lists bankruptcy as a reason the period can be suspended when a notice of deficiency is issued less than 90 days before, on the day of, or after the bankruptcy filing (before the automatic stay ends).

What changes the answer

Within those rules, a handful of details move the date in one direction or the other:

• Disclosure on the return. An amount left out of gross income does not count toward the 25 percent test if the return, or a statement attached to it, disclosed it clearly enough to tell the IRS its nature and amount (section 6501(e)(1)(B)(iii)).
• Overstated basis. Understating a gain by overstating the cost or basis of what you sold counts as an omission of income for the six-year test (section 6501(e)(1)(B)(ii)).
• A late signed admission. If, in the last 60 days before the deadline, the IRS receives a signed document showing you owe more income tax for the year, it gets at least 60 days from receipt to assess that additional amount (section 6501(c)(7)).
• Loss carrybacks. A deficiency caused by carrying a net operating loss or capital loss back to an earlier year can be assessed as long as the year that produced the loss is still open (section 6501(h)).
• Undisclosed listed transactions. If a required disclosure of a listed transaction was left off, the period for tax tied to that transaction stays open until at least one year after the IRS receives the information (section 6501(c)(10)).
• Payroll and withholding returns. Quarterly employment tax returns filed during a year are treated as filed on April 15 of the following year (section 6501(b)(2)), so all four quarters share one deadline.

For example: one omission, two different deadlines

For example, imagine a consultant whose only income is her practice. She files her 2023 return on its due date in April 2024 and reports $400,000 of gross receipts. The ordinary three-year window for that year closes in April 2027.

Now suppose a client paid her $120,000 that never made it onto the return. Twenty-five percent of the $400,000 she reported is $100,000. Because the omitted $120,000 is more than that, the six-year rule applies and the IRS has until April 2030. If the omitted amount had been $90,000 instead, the ordinary three years would still govern. And if she had disclosed the $120,000 on an attached statement in a way that told the IRS what it was and how much it was, that amount would not count toward the 25 percent test at all. (This is a hypothetical, not a real case.)

How long should you keep tax records?

The record-keeping rules follow the assessment rules. The IRS recommends keeping the records behind a return:

• 3 years in the ordinary case;
• 6 years if you did not report income that is more than 25 percent of the gross income shown on the return;
• 7 years if you claim a loss from worthless securities or a bad debt deduction;
• indefinitely if you did not file a return or filed a fraudulent one; and
• at least 4 years for employment tax records.

Records tied to property should be kept until the period closes for the year you sell or otherwise dispose of it. Keeping the files is also your best protection if an old year is reopened: it is much easier to answer an audit from records than from memory, and our page on the records the IRS requires to support business deductions explains what proof each kind of expense needs. An older year that is audited can also bring penalties the IRS adds after an audit on top of the tax and interest. If you find a mistake in a year that is still open, amended return or voluntary disclosure explains the ways to correct it.

Common mistakes with older tax years

• Counting from the day you filed an early return. The clock starts on the due date, so a return filed in February does not close any sooner.
• Assuming an IRS-prepared substitute return started the clock. It does not (section 6501(b)(3)); only a return you file does.
• Discarding records after three years. Basis records, loss carrybacks and foreign assets can keep a year relevant long after the ordinary window.
• Signing an open-ended consent without a plan to end it. Form 872-A stays open until a notice ends it, so it should be signed with that in mind.
• Refusing a consent reflexively. The refusal may bring a formal notice sooner and can cost the chance of an Appeals review.

What to do this week

1. For each year the IRS has asked about, write down the due date and the date the return was actually filed.
2. Mark the three-year date for each year, then ask whether either six-year rule or a no-limit case could apply.
3. If a consent form arrived, read Publication 1035 and do not sign or return it until you have decided whether to sign, limit or refuse.
4. Gather the returns, the IRS letters and the records for the items under review; our checklist for a first meeting about an IRS audit lists what to bring.
5. Note the response date on the latest IRS letter and keep proof of anything you send.

Frequently asked questions

Can the IRS assess tax after the deadline if it raised the issue before?

No. Publication 1035 says the IRS cannot assess additional tax once the period has expired, even if it discussed the adjustment with you beforehand. That is why examiners ask for consents before the date, not after.

Will you be penalized for refusing to sign a consent?

No. Publication 1035 states that no penalty is charged for not signing. It also says the IRS does not make a jeopardy assessment simply because the period is about to expire or because a taxpayer declines to extend it.

Does the same three-year rule apply to refunds?

Refunds follow a separate statute. A claim is generally due within 3 years from filing or 2 years from payment, whichever is later, under section 6511; our page on how long you have to claim a tax refund covers the details and the look-back limits.

Once tax is assessed, how long can the IRS collect it?

A second clock starts at assessment. The IRS generally has 10 years from the assessment date to collect, under section 6502, and several events pause that clock. See how long the IRS has to collect a tax debt.

What if you file an amended return showing more tax near the deadline?

Section 6501(c)(7) gives the IRS at least 60 days after it receives a signed document showing additional income tax, when that document arrives in the last 60 days of the period. The extra time covers only the additional amount shown.

Can an estate or a dissolving company get a faster answer?

Yes, in some cases. Under section 6501(d), an executor or a corporation that meets the dissolution conditions can make a written request for prompt assessment, which generally limits the IRS to 18 months after the request, but never more than three years after filing.

Talking with a tax attorney about an older year

If the IRS has asked about a year you thought was closed, or has asked you to sign an extension, the dates and the reason for the request matter more than anything else. Kathryn Meyer can review the notice, the filing dates and what the examiner is asking for before you respond. For a broader overview, see understanding the IRS audit process, or contact the firm or call (571) 560-8674 to discuss your situation.

Sources

• 26 U.S.C. 6501, Limitations on assessment and collection
• IRS, Time IRS can assess tax
• IRS, IRS audits
• IRS Publication 3498, The Examination Process
• IRS Publication 1035, Extending the Tax Assessment Period
• 26 U.S.C. 6038D, Information with respect to foreign financial assets
• IRS, About Form 8938, Statement of Specified Foreign Financial Assets
• IRS, How long should I keep records?
• 26 U.S.C. 6511, Limitations on credit or refund
• 26 U.S.C. 6502, Collection after assessment
• IRS, Time IRS can collect tax