IRS Statute of Limitation Laws

The IRS has laws and rules in place for just about everything. In fact, there are even laws about when things have to be done. For example, the IRS has three years to audit a tax return someone has filed and ten years to collect on owed taxes. These are just two of many statutes of limitations that the IRS imposes. To learn about these and other statutes and how they might affect you, read on!  

Claiming Refunds

First things first, you should be aware of just how long you have to claim and collect a tax refund. Basically, you have three years from the date of your original tax deadline or two years from the day the tax was paid. The later one is the one that will apply to you, which works in your favor!

Getting Audited

As mentioned earlier, when you file a tax return and don’t get that dreaded audit notice, don’t breathe a sigh of relief just yet. The IRS has three years to audit your return dating from the day you actually filed or, if you filed early, the actual due date of your tax return. However, there are some exceptions to the audit rule. If you are guilty of omitting more than 25% of the total income reported on your taxes or have undisclosed foreign financial assets totaling more than $5,000, the IRS has six years to audit you. And, in cases of fraudulent filing, there is no statute of limitations to protect you!

Outstanding Debts

Once tax liability becomes finalized, the time starts ticking in terms of how long the IRS has to collect on the money you owe. The organization has ten years to collect on your debt, and, if it doesn’t, the statute of limitations expires and you’re off the hook!

As you can see, there are all kinds of time-sensitive laws and rules held by the IRS. If you’re concerned about how some of these laws might affect you, remember you can always ask a tax professional for advice!